Should I withdraw EPF Account 2 to pay off my car loan?

Honestly I would not raid EPF for a car even if there was a way. I did the maths once when tempted: my EPF was earning more in dividends than the flat rate loan was really costing me, and that money at 34 has 20-plus years to compound, that's huge at retirement. Car loans at 3.4 percent flat are relatively cheap debt in Malaysia. If cash flow is tight, focus on cutting other expenses or refinancing, not draining your future. EPF is basically your only forced savings, protect it. Please double-check the actual withdrawal rules on the KWSP website and maybe speak to a financial planner before doing anything drastic.

From my experience, think twice before touching EPF for a car. First, EPF withdrawals are limited to specific purposes like housing, education, medical and age 50/55, you generally cannot just withdraw to pay a car loan. So this plan may not even be allowed. Second, even if you could, EPF historically gives around 5 to 6 percent dividend, which beats your car loan's effective interest, so mathematically it's better to keep the money compounding for retirement. A car is a depreciating asset, don't sacrifice retirement for it. Better to just continue paying the loan normally. For a decision this big on your retirement money, sit with a licensed financial planner first.