FAQs to buy new car with car financing in Malaysia

Here are some of the most frequently asked questions for buying a car with financing in Malaysia.

How much can I borrow from the banking institution?

The margin of financing will depend on your credit standing subject to a maximum of 90% of purchase price or any other lower margin of financing fixed by the banking institution.

What is the minimum deposit required?

The minimum deposit is 10% of purchase price. However, a banking institution may fix a higher amount.

What are the term charges for a Hire Purchase (HP) facility?

The maximum term charges for a HP facility under fixed rate financing is 10% flat per annum while term charges for variable rate financing will be quoted at a margin above the base lending rate of the lending banking institution.

Do I require a guarantor for my HP facility?

The need for a guarantor depends on the credit assessment of the banking institution. The guarantor should be one who is acceptable to the banking institution.

What should I do if the guarantor or I did not get a copy of the HP agreement 14 days after entering into the agreement?

You should contact your banking institution to get a copy of the agreement.

Can my banking institution insist that I insure with an insurance company on its panel?

You can either insure with an insurance company on the panel of your banking institution or an insurance company of your choice. Normally, a banking institution has at least four insurance companies on its panel for the convenience of its hirers.

Can I keep the motor vehicle registration card to enable me to renew my road tax upon expiry?

Generally, banking institutions will keep the registration card until the HP financing has been fully settled in order to prevent any inconveniences that may arise due to damage, misplacement or theft of card. As such for the convenience of their hirers, most banking institutions will provide insurance and road tax renewal services to their hirers.

Can I modify the monthly repayment amount if I have financial difficulties?

This is subject to your banking institution? discretion and you are advised to discuss the matter with your banking institution.

What happens if I settle my fixed rate HP financing earlier than the date originally agreed upon?

If you settle your outstanding balance earlier, you are entitled to a rebate on the term charges.

When can my banking institution repossess my motor vehicle?

Under a HP agreement, a banking institution can repossess a motor vehicle after the hirer had defaulted two successive instalments or the final instalment.

What is the time limit for banking institutions to repossess the motor vehicles after serving the Fourth Schedule notice?

Banking institutions can repossess the motor vehicles anytime after 21 days from the date the Fourth Schedule notices were served if the overdue instalments are not paid.

How do I determine the identity of the repossessor?

The repossessor will have to show you an authority card, which has the name and address of the repossessor and your banking institution, nature of appointment of the repossessor and the signature of an authorised representative of your banking institution.

How do I get my motor vehicle back after it was repossessed by my banking institution?

After the repossession, your banking institution will issue you a Fifth Schedule notice. This notice gives you a chance to settle the amount outstanding within 21 days. You can get the motor vehicle back provided that, before the expiry of 21 days, you - pay all outstanding arrears with interest due and the costs incurred by the banking institution (costs of storage, repair or maintenance, repossession and re-delivery); or - settle the balance in full including the costs of repossession, storage, repair or maintenance.

When can the banking institution sell the repossessed motor vehicle?

The banking institution can sell the repossessed motor vehicle when the hirer does not make any payment after the 21 days stated in the Fifth Schedule notice.

Can I introduce a prospective buyer to buy the repossessed motor vehicle?

Yes. Before the expiration of the Fifth Schedule notice, you can introduce a buyer to buy the repossessed motor vehicle at the price indicated in the Fifth Schedule notice.

Whom and where can I complain if I am not satisfied with the manner in which my motor vehicle was repossessed?

You may lodge your complaint with the banking institution. Alternatively, you may also lodge your complaint with the Association of Hire Purchase Companies Malaysia at the address below:

Unit 605 Block C,
Phileo Damansara 1,
No. 9 Jalan 16/11,
Off Jalan Damansara,
46350 Petaling Jaya, Selangor

If I have defaulted on the monthly instalments, can my banking institution claim from the guarantor?

Yes. Your banking institution can claim the payment from the guarantor because the guarantor has agreed to undertake the liability to repay your debt in the event of your default.

What are the rights and responsibilities of a guarantor under the HP Act?

A guarantor has the following rights under a HP agreement:

• To receive a copy of the HP agreement.
• To receive all notices on payment issued by the banking institution to thehirer.
• To be discharged from liability once the amount due to the banking institution is fully paid.
• To take legal action against the hirer for breach of obligation.
• To be indemnified by the hirer against claims by the banking institution after paying the amount due.

Can my banking institution claim any amount from me after the repossessed motor vehicle is sold?

Yes. If the proceeds from the sale of the repossessed motor vehicle are not enough to cover your liabilities, your banking institution can claim the amount outstanding from you.

Do I still have to pay my monthly instalments if my motor vehicle is stolen?

Yes. This is because your liability to pay the monthly instalment does not cease with the loss of your motor vehicle. However, you may claim from the insurance company, the market value of the insured motor vehicle or the sum insured, whichever is lower.

What happens to the HP agreement in the event of the death of the hirer?

If the personal representative has obtained a Letter of Administration or Grant of Probate, the rights, title and interest will be transferred to the personal representative who will take over the responsibilities of the hirer. Otherwise, the banking institution will repossess the motor vehicle after defaults in four successive monthly instalments.

How can I transfer/sell/part possession of the motor vehicle to a third party even though the motor vehicle is still financed under my name?

It is illegal to transfer/sell/part possession of the motor vehicle without the permission of your banking institution, who is the legal owner. If you do so, you may incur substantial losses and penalties as you are still fully responsible for the liability and losses incurred. Ensure that you have fully settled your HP debt before you sell your motor vehicle. If you wish to use the proceeds of the sale of your motor vehicle to pay the outstanding balance of your HP financing, get the consent of your banking institution to sell the motor vehicle and arrange for the proceeds of the sale to be paid directly to the banking institution to settle your outstanding balance. If there is any shortfall, you will be responsible for repaying the balance. If there is a surplus, it will be refunded to you by the banking institution.

Source: kereta.info