First, let’s understand the car repossession process…
STEP 1: Pre-repossession noticeIf you have missed your car loan payment of two consecutive months, you will be served with a pre-repossession notice a.k.a. Fourth Schedule notice. This is to inform you that to inform the bank wants to repossess your car. It will be sent to your address as per stated in your sales and purchase agreement or last known address that was shared by you to the bank. So, if you’ve changed your address, don’t forget to inform your bank to avoid any other issues.
Do know that you’re not yet in deep shiz. This notice will give you 21 days to sort out this matter to avoid repossession. How? Well, you have two choices:
- Pay the outstanding arrears as stated in the Fourth Schedule notice
- Return the motor vehicle to your banking institution and pay any outstanding debt
STEP 2: Repossession of your carSo, what happens if you don’t settle this issue after 21 days? Well, the bank now has the right to repossess your car. It will issue an order to the procurement agent (EPS) to take your car away. They warn you already, but you never listen. Now, find a corner and start doing some self-reflection.
If this happens, below are what you should take note:
- Agent’s name
- Permit number
- Bank name and address
- Car storage location
Once the bank took your car, you will receive a notice to inform you that the bank has successfully repossessed the car. You will also receive another notice called the Fifth Schedule within 21 days after the repossession has taken place. The notice will state the amount you have due to pay the bank including missed payments and charges from the bank like the cost of a repossession, storage, repair or maintenance as well as re-delivery.
STEP 3: Post-repossession notice
If you still want your car back, below are what you can do. But remember, you have 21 days to sort this out, so don’t delay it again.
- Pay all outstanding arrears and out of pocket expenses incurred by the banking institution to take back possession of the car.
- Repay in full including the balance due and settle all out of pocket expenses.
- Introduce a buyer to purchase the motor vehicle at the price indicated on the notice.
21 days had passed since the day the Fifth Schedule notice was sent and you didn’t take any action. Now, the bank will then send you another notice to let you know that your car will be sold through public auction or a private sale. The notice will be sent to you 14 days before the auction.
STEP 4: Disposal of car notice
If you think you can get away with it because the bank sold your car already, YOU’RE WRONG! What? Why? Usually, the auctioned price is much lower than the current market value. To add, the price will actually reduce at each subsequent bid carried out until the car is finally sold.
STEP 5: Selling the car
Then, the proceeds from the sale of the vehicle will be used to pay any dues to the bank. If there's any balance, the bank will forward it to you. BUT, if the amount doesn’t cover the outstanding amount due, the bank will still chase you for the shortfall. Not only that. You might also need to bear the auction expenses. Koyaklah like this...
So, your car kena tarik, what are your rights?
- The bank CAN’T repossess your car if you have paid more than 75% of your car loan. To do so, it needs a court order.
- The procurement agent needs to have a VALID AUTHORITY CARD from KPDNKK, which needs to be presented to you together with the repossession permit and MyKad before taking your car. If not, you have the rights to not give your corporation.
- The repossession can only be done in the presence of the ‘owner of the car’. If not, it can be considered stealing.
- The procurement agent is not allowed to repossess your car after 9 pm or during public holiday. Their working hours starts from 9 am to 9 pm.
- If your car is in a gated residential area, the procurement agent isn’t allowed to repossess your car without your consent. If he/she still do so, you can make a police report because it’s considered as illegal trespassing.
- The agent is not allowed to use any violence against you to repossess the car. He/She needs to act professionally.
- You have the rights to remove your personal belongings (including a car stereo system or additional accessories) from the car before it’s taken away.
If the opposite of the above listed happens, you have the right to lodge a police report because the agent has violated the Consumer Act.
If you can’t pay, please don’t create more drama by doing these…
- Hide the car from the bank to avoid being repossessed.
- Sell the car components.
If you’re caught doing any of the above, the bank will blacklist you, you’ll have a bad record in CCRIS, and will be subject to various fines. Why create all these unnecessary stress, right?
Here are what you should do instead:
- Okay, you know that you’re having difficulties to make repayment. Why not discuss with the bank to restructure your car loan? The bank may revise your monthly payments and/or extend the tenure to ease your burden. Yes, the bank may not be obligated to revise your finances, but there’s no harm in trying.
- If the bank refuses to revise your monthly payments and you seriously can’t pay what you owe, then your best option at this stage is to sell your car before it gets to the repossession stage. Just make sure you have enough time to do this because it can’t be done overnight.
READ: Did You Know You Can Save Money if You Sell Your Car Yourself?
So, there you have it - we hope that this article can benefit those who are involved in this predicament. To those who are still paying their car loans, hopefully, this won’t happen to you because car repossession can affect your credit rating. This means that you’ll have an even harder time to get any other loans or even mortgage in the future.
Other than that, don’t forget to check if your car insurance and road tax are still valid - later kena saman pulak. If it’s not valid, you can visit Loanstreet’s insurance page to renew/purchase your car insurance and road tax.