SIBU: Hire purchase companies or financial institutions must obtain a court order before repossessing defaulters’ vehicles if they have paid a substantial amount of their loan.Minister of Domestic Trade, Co-operatives and Consumerism (MDTCC) Datuk Seri Ismail Sabri Yaakob said the amended Hire Purchase Act 1967 when come into effect could better protect borrowers as it prohibited repossessors from repossessing their vehicles if they had settled more than one-third of their loan.

Under the amended act, only repossessing companies approved by MDTCC can conduct such activity, Sabri stressed.

He also emphasised that the amended act would help alleviate the financial burdens of the hard pressed defaulters, who need to pay an array of charges related to the repossession of their vehicles.

“They will have to go to the court and get a court order to repossess the car if a defaulter has paid more than one-third of the loan amount.

“This means that they can’t repossess the car anytime,” he told The Borneo Post in a recent interview here.

According to Sabri, the existing Hire Purchase Act was riddled with loopholes which necessitated the need for amendment to better safeguard the rights of borrowers.

He lamented that under the existing act, repossession could still be carried out even if a defaulter had paid 90 per cent of his loan.

If that was not taxing enough, the defaulters would need to reach deep into their pockets to foot repossession fee, towing charge (if any) and storage fee.

“So, you see, the buyers are the ones at the receiving end. Sometimes, the proceeds from their car auction are inconsequential to pay up their loan.

“At the end of the day, they are indebted to the hire purchase companies or financial institutions. Already, without a car, they still need to foot for the legal fee,” he lamented.

Sabri said approved repossessing companies would be issued with licences and a complete list of repossessors would be kept with them.

“The companies can hire anybody but we will have to approve. And we will vet their background to ensure that they do not have any criminal record. We want to know the background of the repossessor,” he added.

Presently, he said, banks did not go through these, adding that there were many loopholes in the existing procedures.

“The banks just hire anybody directly and not through a company.”

On the standardisation and capping of repossessing fee, he said they would include it inside the regulations once the bill on the amendment had been passed.

--The Borneo Post