Offers made by dealers to the effect of ‘zero down payment required’ for the purchase of cars is against the law, said the Ministry of Domestic Trade and Consumer Affairs (KPDNHEP). This is a sales pitch that is used by dealers of both new and used vehicles, according to a Harian Metro report.
The sales tactic is surely an attractive one for potential customers, allowing them to sidestep having to pay a full 10% down payment up front. But, car buyers should now know that this is strictly against the law.
“There are dealers that have been found to manipulate a vehicle’s price via the selective naming of its model variant before offering the zero-deposit purchase method to customers. If buyers are required to make a down payment of 10% out of the vehicle’s price, it demonstrates the customer’s ability to service the monthly repayments, while helping to reduce his or her monthly commitments (compared to a zero-down payment scheme),” said Azman Adam, a KPDNHEP Selangor officer.
“Additionally, (the 10% down payment) helps the buyer avoid being blacklisted or declared bankrupt should the monthly repayments become too costly to bear. Companies that do not comply are punishable according to Section 31 (1) of the Hire-Purchase Act 1967,” he said, adding that the ministry has conducted Ops 0% ASB 1967 across Selangor, with checks conducted upon 35 dealers.
These schemes contravene Section 31 (1) in the Hire-Purchase Act 1967, which states that “an owner who enters into a hire-purchase agreement without having first obtained from the proposed hirer thereunder a deposit in cash or in goods, or partly in cash and partly in goods, to a value not less than one-tenth of the cash price of the goods comprised in the agreement, shall be guilty of an offence under this Act.”
For the purposes of a hire-purchase agreement, the owner in this case is the financial institution – usually a bank – and the proposed hirer is the customer who is about to purchase a vehicle under these terms. The financial institution is the owner of the vehicle that is being financed, until the vehicle has been paid for in full.
The operation was conducted following the ministry’s discovery of such offers becoming increasingly widespread, and 11 dealers have since been found to be in breach for not billing the minimum 10% deposit, the report said. “All companies which have broken the rules have been ordered to stop all ‘zero down payment’ promotions and investigations are ongoing,” Azman said.
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So please reduce car price/tax or else no point putting that kind of law in the 1st place
I do agree, reducing taxes does help. Government would just tax you elsewhere to recover losses in tax revenue. They might increase road tax, introduce carbon tax, fuel tax and etc. End of the day, you still pay.
Of course, if you can’t afford a new car, DON’T BUY ONE.
Kami suka beli kereta sambung bayar!
All the same type as john. samseng, pemalas, sokong BN
The rakyat has spoken and they disagreed with you.
Malaysians must learn to live within your means. Don’t berlagak with your friends with fancy car if you cannot afford a car.
This advice is especially to those who like to buy expensive cars before balik kampung. Then after festive period, car gets tarik balik. According to our banks, after the festive period, highest number of tarik baliks.
Learn to live within your means.
Car price is not an issue. It is whether you know how to manage your finances and you don’t live above your gaji.
Many in Malaysia always “Keep up with the Jones” and kaput in their finances.
No money also buy BMW or Mercedes with loan to aksi
Yes, abolished those import and excise duty for car below 1800cc for instance.
Sokong!!!…nowadays conti luxury brand have lots of below 1.8 liter variant…turbocharged to compensate the small cc
Doesn’t matter.what matters is the buyer service their loan.that’s called responsibility.Anybody remembers what’s tje 80s like applying for car financing
Haven’t thou heard of 110% loan for car hire purchase?
I’m neither for or against this law but in my opinion it’s getting difficult to apply for loan nowadays due to too many loan defaulters.I think 10% downpayment is the minimum limit because they are many buyers who wants full loan but don’t realised that they will be burdened by high monthly installment instead.
Now there are so manu easy loan repayment from anything such as car dealers,electrical appliances etc..It’s no wonder Malaysians are debt ridden.
You are right. These people always in debt. Some earn even RM10k a month also but always in debt. Cause no money also must buy Alphard, BMW and Mercedes
Then PTPTN tak bayar balik
Biasala bro..biar papa janji bergaya..
Zero downpayment and sambung bayar in Malaysia is very famous. This has to stop.
Because this is the No 1 cause of defaulters in Malaysia. And create lots of NPL for banks. At the end of the day, the NPL trickle down to us end users or customers who are innocent via the bank increasing their banking charges and interests rates
Too many salesman are promising ZERO downpayment. Some even worse, they do 110% even to give the buyer extra money to choose options.
Most defaulters, according to banks are from our 1.6 million Government servants. They must learn to live within their means.
Sambung bayar also is a big big problem.
According to banks? Sorry but where did you get such info as banking details are private and are governed by the Banking Act. Please show proof or I will assume you are just trolling as usual.
Correct. Some people got no money, but die die want to buy nice car to impress relatives. So they go buy from sambung bayar samseng and become victim
Don’t tell me u guys just knew about this? We’re guys sleeping all this time?
No money but still want to have 6 kids and still want to own luxury cars.
there are other more important things that this
I kind of disagree on the statement that says Additionally, (the 10% down payment) helps the buyer avoid being blacklisted or declared bankrupt and helping to reduce his or her monthly commitments.
This kind of scenario customer normally do not have a big cash for start-up purchase and they know the 10% differences is very small when convert to monthly payment. Let’s take RM50K price car for example with 10% down-payment and RM45K loan compare with 100% loan. And absolutely this scenario customer will take 9 years loan to reduce his monthly commitment. The customer also knows, the bank won’t approve if he submit for RM100K car.
For RM45K 90% loan with 3% interest for 9 years, the monthly installment will be RM529.17.
For RM50K 100% loan with 3% interest for 9 years, the monthly installment will be RM587.96
Hence the different is just RM58.80 per month. This is not a significant value to make this kind of customer bankrupt.
This kind of customer would rather used the RM5K down-payment (If he had) for his family expenses as first priority while do not mind to pay additional 50 bucks monthly. Furthermore this type of customer would foreseen an incremental of basic salary from his employer in the upcoming year to reset back the 50 bucks differences a month.
Its not the monthly difference. It is when they cannot service the loan after 1 or 2 years. the bank will auction the car. That 10% down payment make huge difference since even if they still owe the bank after auction, they still stay below bankruptcy limit.
10% downpayment should not be factor in bankruptcy. Buying a car should not even come close to bankruptcy!!!!! If anyone is buying a car and risking bankruptcy, they should not be buying a car!
Totally agree. Especially for first-time owners.
Agreed…Whatever he said does not makes sense to me. Plucking whatever to said from the skies.
Rather than saying something not smart, they should get off and get out from the comfort of their office and gather data before commenting.
While I do agree with you on this,let me explain why I don’t agree 100%.
Let’s start by the 10% down payment on a rm50k car.While the monthly repayment may only cost extra rm50++ per month over 9 years but after 5 years once you want to sell the car then you can see where the rm5k goes to.It helps to lower your outstanding balance.This is assuming that you want to sell it of course.If not then this is not applicable.
When KPDNHEP can reduce car price by 30%, make car a daily transport be affordable, then all afford to pay even more than 10%. KPDNHEP PLS SOLVE THE ROOT CAUSE.
Aiyoh…it’s buyers and dealers choice mah. Why so kaypoh?
Kaypoh?? Because it is the law, bodoh!
If the government reduces the import duty, maybe people can afford to pay the downpayment.
Australia imports camry from RM 86k.
IMagine how much a vios, city etc… will cost.
Lol..import duty already 0% if import from ASEAN, Japan, Korea, Australia.. are you talking bout excise tax? Vios, city, Camry all made in bolehland not import. So no import duty.
Ekceli i spent RM9.99 on Proton Iriz FL downpayment so no problem.
That’s just a booking fee, not a down payment.
Actually u must know the difference between booking and downpayment…so no problem.
That booking not downpayment
Even by rights, a standard deposit/booking must be at 1%…if he can’t even place a booking at 1%, do KPDNHEP think he can churn out 10%? And if he can’t giving 10%, do you think he/she can keep paying installment for 108 months?! KPDNHEP, you guys need to stop eating curry puff and drinking teh tarik during meeting and see the entire auto industry right to the core. Car prices is too high…it ain’t healthy, loan tenure is too long, ain’t healthy either, 10% downpayment is also to little to gauge his/her capability over the repayment and last but not least…stop being ONE SIDED implement the law la…RM9.99 booking fees is just PLAIN DUMB!!!!
Very easy lah! Just reduce car prices by introducing first car tax exemptions, and fix the kinds of cars civil servants can buy and drive based on their grades and pay scales, also can help stop corruption and discourage additional and highly unneccesary increase of the world’s largest civil servant population (by ratio)!!!
Zero DP salah, interest tinggi-tinggi tak salah. #aptb
When their 3rd national car starts selling, they will offer 110% loan. This is the problem when gov goes into business.
If you can’t even pay upfront 10% of the car value that means you can’t afford the car. Please don’t stretch yourself. These 0% upfront are looking to push stocks and entice those gullible buyers.
how about aeon credit give RM1 or RM0 downpayment for motorbike? that’s illegal too.
in fact, raising the tax of other car manufacturers to protect proton and perodua is anti-competititve and illegal too. why no action taken?
why make noise.. want to gain publicity kaa?..those 0% downpayment is to clear stock laah..popular models and expensive models must pay 10% downpayment or at least 5% at expenses of sales commission.
Maybe wrong but I think the article is referring to HP NOT DEPOSIT to BOOK car.
Syukur.. My iriz just paid rm9.90 as downpayment. So it is still legal..
the best way to reduce the NPL for car loan is to reduce the loan tenure. min 5yrs, max 6yrs. this method will produce systemic reaction among industry player and consumer.absolutely consumer need to pay some substantial DP (downpayment ya:-),the possibility of car price will be decrease & consumer will buy the car which are matching with thier monthly income. WTF you need 9 yrs car loan commitment when the car can consider junk and not safety OTR at that time.malaysian consumer deserve to have a better, comfort and safety car from time to time.cheers
Trust dealers to come up with some other novel scheme to circumvent the 10% deposit requirement in a matter of days. Anyway to sidetrack, with the numbers of bookings that are reportedly in the thousands as reported by Honda for its H-RV, Perodua for its Aruz and Toyota for its Vios, what lies the future of our public transport?
I think they will not have the power to stop this. U can buy proton with only rm9. 90 for booking now.
Expecting Perodua will come out with Rm1.00 booking gimmick to push for Aruz sales.
In other country it have lease credit, so call discount from the dealer. Just like BMW in other country have lease credit for loyalty customer. Which mean you have an old BMW, than you buy new car (I’m not talk about trad-in) from BMW they will have discount for you.
Go Google it (Lease Credit)
The interpretation of the Act inarguable. The “owner” is actually the car seller. They sell the car to the hirer and paid for in full by the hirer through bank financing. The bank is not the “owner” in this dealing between the seller and the buyer. The bank just lend money to the buyer and hold the car title as collateral.
every car dealer in malaysia are doing it.some customers dont want to pay downpayments.