Amendments to the Hire Purchase Act 1967
There are 3 main changes to the Hire Purchase Act 1967-
1) New sections 17A and 17B (Permitted Repossessors)-
- The appointment of car repossessors is now regulated. The owner of the vehicle (bank) will now need to appoint a repossessor by issuing a permit in writing, i.e. only those appointed by the Government via the Controller are allowed to carry out repossessions.
- Purchasers/ intended hirers will now only pay not more that 1% of the price of the car and the owner (bank) can ONLY collect the booking fee when the form set out in Part II of the Second Schedule has been duly completed. If the transaction is cancelled, the purchaser will only be entitled to refunded 90% of the booking fee.
- Upon signing of the HP Agreement, all booking fees and deposits will be paid to the bank. If the dealer fails to deliver the vehicle, then the purchaser will be refunded in full.
- the bank cannot repossess your car WITHOUT A COURT ORDER if 75% or more of the cash price of the vehicle has been paid.
- the bank must still issue a Fourth Schedule notice giving not less than 21 days.
- Since monies will not actually touch their hands, they would need to dip into their own pockets first to secure a car.
- There will be more applications for overdraft facilities to cover their costs. It must be noted that cash-flow will now be affected.
- The waiting list is normally a forecast and should the waiting period tires out the customer, a cancellation will mean that the dealer may not get their costs back.
- They have to now mobilize more personnel to deal with collection of booking fees and deposits. I suspect a backlog may occur since the car sales in Malaysia have not really been affected substantially.
- The loans officers will be more itinerant compared to now, when dealers will handle most of the paperwork and deal with the banks at a later time.
- The hand-in-hand relationships banks have with dealers may now be superficial.
- Having now to apply for a repossession court order, banks will sustain more costs although I'm sure costs would be awarded. But what about the Courts' views on the matter? Is there going to be a special court to entertain these kinds of applications?