Car repossession is anyone’s nightmare. If you fail to pay for your car loan consecutively, you may risk getting your car repossessed by the bank.
We hope you will never find yourself in that situation. However, for your knowledge, we have put together information that you should know about car repossession, particularly the rights of a hirer and owner or repossessor.
Facts about car repossession
Bjak would like to share some facts that you should know about car repossession:
1. Firstly, a vehicle purchased on a hire-purchase basis makes the buyer the hirer and the financial institution the owner.
2. Briefly, according to the Hire-Purchase Act 1967, the financial institution as the owner reserves the right to repossess a vehicle if the hirer fails to pay the owner the instalments as stipulated in the hire-purchase agreement.
3. Additionally, repossession agents appointed by financial institutions must be registered with the Ministry of Domestic Trade and Consumer Affairs (KPDNHEP) to obtain a permit as a repossession agent.
4. Most police reports by repossession agents are made after the repossession of vehicles.
5. After repossessing vehicles, repossession agents will lodge police reports to inform the police of the validity of the action taken, in line with the legal procedure.
6. Police are not involved in car repossession carried out by repossession agents.
Your rights when dealing with car repossession agents
Next, these are the rights of a hirer that repossession agents must abide by before repossessing any vehicle:
1. Repossession agents must not repossess vehicles in gated housing areas.
2. In addition, repossession agents must not repossess vehicles on a public holiday.
3. Further, repossession agents can only carry out repossession work from 9 am to 9 pm.
4. Repossession agents must also present a repossession order from the financial institution and court order if the hirers owe the bank more than 75% of the car loan and have defaulted their loan twice consecutively.
5. Repossession agents must also possess a valid permit holder issued by KPDNHEP.
6. Besides, repossession agents must act professionally and dress appropriately when carrying out repossession work.
7. Repossession agents are also strictly prohibited from using strong-arm tactics in performing their work.
8. Repossession agents must give hirers a reasonable time to inspect their vehicles and remove their items and belongings from the cars before the repossession.
9. Repossession agents must also lodge a police report on the repossession immediately to inform them of the validity of the repossession.
10. If there is any problem during the repossession, such as crime, violence, extortion or trespassing on premises, hirers have the right to report the incident to the police for legal action against the repossession agents or financial institutions.
Procedure before car repossession
Below is a procedure before car repossession that you should understand:
1. Before repossessing your vehicle, the financial institution must serve you with the Fourth Schedule – written notice on the financial institution’s intention to repossess your car.
2. The Fourth Schedule will expire after 21 days. A second notice will follow suit 14 days after the date of the Fourth Schedule to notify you of the financial institution’s intention to repossess your vehicle after the expiration of the Fourth Schedule.
3. You can avoid car repossession by paying the outstanding debts stated in the Fourth Schedule before the expiration of the 21-days’ notice or returning your vehicle to the financial institution before the notice expires.
4. You will need to settle any outstanding debts after deducting the vehicle’s value.
Procedure during car repossession
If a repossession agent repossesses a hirer’s car, the hirer has to note the following:
1. Name of the repossession agent
2. Number of the repossession permit
3. Name and address of the bank
4. Storage location of the vehicle
Procedure after car repossession
After your car’s repossession, these are the steps you should take:
1. Within 21 days of the repossession, the financial institution will serve the hirer and every guarantor with a written Fifth Schedule notice. The notice will enable you to get back your vehicle by:
- Paying the outstanding debts and direct cash expenses which include repossession, storage, repair, maintenance, and return costs incurred by the financial institution, or
- Paying the outstanding debts in full and direct cash expenses which include repossession, storage, repair, and maintenance costs incurred by the financial institution.
2. If the hirer or guarantor fails to pay the outstanding debts specified in the Fifth Schedule within 21 days, the financial institution reserves the right to sell the vehicle through a public auction or offer the hirer to purchase the vehicle at a price lower than the estimated price set out in the Fifth Schedule.
Know your rights as a hirer
If your vehicle is under a hire-purchase agreement, ensure that you pay your bank loan on time. Additionally, please strive not to miss any loan payments to avoid repossession.
Further, ensure that you are aware of your rights as a hirer, as shared above. Knowing your rights as a hirer is essential to avoid being conned by unscrupulous parties.
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