Kuala Lumpur and Selangor Car Dealers and Credit Companies Association president Khoo Kah Jin said banks may be killed "overnight" if they could no longer offer financing for cars past the 12-year mark.

"Twelve years to me, I don't agree. Too drastic," he told The Malay Mail Online yesterday.

"It'll hit second-hand dealers, the public. The banks will be quite fearful because they do a lot of financing, especially for older cars. Then overnight you'll kill them," he added.

For vehicle owners, Khoo said a 12-year cap on the ages of vehicles would mean they must discard their cars a few short years after servicing their auto loans in full.

He pointed out that today, vehicle loan repayment periods could go up to 10 years.

"After you finish your instalment, another two more years to go, then you have to scrap your vehicle - no value. A bit ridiculous isn't it?" he said.

To cushion the blow, Khoo said financial institutions may be forced to consider shortening the maximum auto loan term length from the current 10-year period.

This would ultimately mean that prospective buyers would have to fork out a larger sum in down payment for a car, as well as higher monthly repayments.

"Now, if you scrap your vehicle after 12 years, the banks will curb their financing. That will have another impact on the price of used vehicles. Maybe they'll only give loans for 7 years," he added.

On Sunday, Deputy Transport Minister Datuk Abdul Aziz Kaprawi reportedly announced that the Road Transport Department (RTD) is working towards a final decision on the probable lifespan of cars in Malaysia.

National newswire Bernama quoted him as saying that it might soon be necessary to set an age limit on cars in the interest of the public.

Aziz was citing a suggestion by Malaysian Institute of Road Safety (Miros) Director-General Professor Dr Wong Shaw Voon, who claimed at a separate event last Friday that cars older than 12 years are not safe to be on the road.

Datuk Tony Khor, president of the Federation of Motors and Credit Companies Association of Malaysia, echoed Khoo's concerns, saying that a mandatory end of life vehicle policy will affect the prices of second-hand cars and accelerate depreciation.

"This should be voluntary. Customers have the right to choose to continue to use or voluntarily scrap it with a subsidy voucher of minimum RM5,000 provided by the government to help buy a new car," Khor told The Malay Mail Online.

"All those vehicles above 15 years, even some 17, 18 years, are still well-maintained, still good. We have to consider the 11 million units of vehicles on the road. If you do this mandatory, it may affect car pricing," he added.

Khor pointed out that many Malaysians cannot afford to buy new cars and said that there are plenty of car workshops in the country that can lengthen the lifespan of vehicles.

Malaysian Automotive Association (MAA) president Datuk Aishah Ahmad said it was likely that Putrajaya was considering imposing mandatory vehicle inspections, instead of scrapping.

"Here, a lot of people can't afford cars. And if after a certain number of years, if you get them to scrap and force them to do it, there will be a lot of social implications," Aishah told The Malay Mail Online today.

"If you get them to get the cars inspected after a certain number of years, that is logical...They're more thinking of cars to be inspected, not to say that they cannot be driven on the road," she added.

PKR's Pandan MP Rafizi Ramli warned the federal government on Monday that forcing car owners to replace their vehicles every 12 years will only worsen household debt in the country.