Having a hire purchase loan for your car is very common in Malaysia. Whether it is for 5 years or up to 9 years, you will have to service the loan until you finish paying. Failure to do so would have consequences and that includes the bank repossessing your car.
Take action before its too late
Not everyone is able to keep up with the loan payments all the time. There might be situations when you might have some financial difficulties which mean you might not be able to pay your monthly installments. While some people might just leave and ignore the situation, you should not. If you are unable to pay your loans, make sure you make certain arrangements or inform your bank to make adjustments. Leaving it like that will only end up with your car being repossessed and you do not want that. But if that is to happen, what should you do?
Proper process involved
The bank would not be able to repossess your car anytime you didn’t pay your loan. There is a process and the banks will follow it strictly. Just because you missed a payment does not allow them to take your car back. The process is as follow:
- The bank will send you a pre-repossession notice after you missed TWO payments.
- If you do not make any payment within 2 weeks, a second pre-repossession notice will be sent to you.
- A week after that, the actual repossession action will be taken.
However, the repossessors must follow certain SOPs where:
- You must give your consent to them to enter your premises to repossess the car
- A notice must be given to you that tells you who you should contact after the car is being repossessed.
- They are not allowed to use force or oppressive measures.
- You must be given time to take out your personal belongings from the car before they repossess it.
- The repossessor must show you a legal document for the repossessing of your car, their personal identity card and the repossession order.
So, what’s next?
Once your car is being repossessed, you would need to pay the arrears in the next 21 days. After that, the car will be auctioned off. The bigger problem here is that the car will most likely be sold at a lower market price which means you may still owe the bank a certain amount (which you must pay off). So, to avoid all this from happening, you should ensure that you have allocated enough to pay your car loans every month. Should you run into any form of trouble, you should discuss with the bank to restructure the loan or to sell the car off (if you can, to avoid complications). For more information, you can check with the Association of Hire Purchase Companies Malaysia.
