Sambung Bayar

• Sambung bayar contracts are not legally valid – KPDN

  In Local News / By Anthony Lim / 23 May 2023 7:53 pm / 17 comments

  

  It’s well known that vehicle pawning, or sambung bayar, in which someone pays monthly instalments to “own” a vehicle that legally does not belong to them, has been around for a long while. It’s usually employed as a way out for vehicle owners unable to pay their monthly instalments to the bank, with payment for the car being continued by a new guardian of the vehicle, who effectively leases the vehicle without owning it.

  Sounds simple enough, but in practice there have been enough cases where the contract hasn’t ended in pleasant fashion, either for the owner or the “buyer.” More importantly, the very act of pawning a vehicle is illegal.

  This was reiterated by the ministry of domestic trade and cost of living’s (KPDN) director-general of enforcement, Datuk Azman Adam, who reminded the public that any contract signed for the purpose of continuing vehicle payments under a sambung bayar scheme is not legally valid, Sinar Harian reports.

  He said that under the hire purchase agreement signed between the owner (in this case, bank or financial institution from which the HP loan was secured) and the lessee, there is a condition that states the lessee cannot ‘sell’ the vehicle without the owner’s permission. Doing otherwise is an offense to defraud the owner under the Hire Purchase Act 1967.

  Azman said that this did not mean that someone else cannot pay for the vehicle and use it, as an assignment of rights under a hire purchase agreement is permitted under Section 12 of the Hire Purchase Act 1967. However, it can only be carried out with the bank/financial institution’s permission.

  

  In such cases, if the lessee intends to hand over his rights over the vehicle under the HP agreement, the lessee must inform the bank/financial institution of his intention and seek to obtain the bank’s permission and approval.

  “If the bank agrees, the hire purchase agreement in the name of the lessee will not be terminated, but a new ‘assignment’ document will be prepared by the bank, and this will be signed by the original lessee, the bank as well as the party continuing payment for the vehicle, under the condition that the party continuing the payment is not on the blacklist of financial institutions. The rights and liabilities of the original lessee will continue to be in effect throughout the assignment period,” he said.

  However, Azman said this was not the case with the majority of sambung bayar cases, with the activity happening outside the knowledge of the bank. In such scenarios, the lessee negotiates directly with the pay-as-you-go party about his intention to ‘sell’ the vehicle that is still subject to a hire purchase agreement.

  “The pay-as-you-go party only needs to provide a small advance payment and continue the monthly installment payment to the bank on behalf of the lessee. Normally, the agreement between the lessee and the new party will be signed via a written contract or sometimes, just by a handshake,” he explained.

  

  He said such cases continue to propagate because it was an easy way out for both sides – lessees unable to pay the monthly installments have a quick solution to continue payment, while those carrying out the sambung bayar process are usually those facing difficulties in obtaining vehicle loans or are blacklisted by financial institutions. Furthermore, the easy process of securing a vehicle and not having to put down a large chunk of money for it makes it tempting for those looking for an easy deal.

  Azman said that while it is difficult for financial institutions to track the vehicle if the pay-as-you-go party fails to pay the vehicle’s monthly installments, the lessee is the one that will bear the burden of such behaviour, including legal action and being blacklisted.

  “In addition, a lessee who is found to have sold his vehicle while the hire purchase agreement is still in place could be sentenced to a fine of up to RM30,000 or three years in jail, or both, under Section 38 of the Hire Purchase Act 1967,” he said, adding that lessees also run the risk of receiving a summons for traffic offences that he didn’t commit. As for those continuing the loan, the car isn’t yours, and it never will be.

  Like it has been in the past, our advice to those thinking of pawning their vehicles or “owning” a fancy ride under a sambung bayar scheme remains the same – don’t do it. It’s illegal and not worth the hassle, even if it sounds like an easy snip at first glance.

   

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• Federal court rules road accident victims should be compensated by insurance, even in sambung bayar

  In Local News / By Mick Chan / 9 August 2022 8:10 pm / 20 comments

  

  A landmark ruling by the Federal Court has held that victims of road accidents should be automatically compensated by insurance companies without requiring legal action to do so.

  Provisions in the Road Transport Act 1987 should be construed to protect all motorists, including victims of road accidents, Federal Court judge Abdul Rahman Sebli said, Free Malaysia Today reports. The intention of Parliament in enacting the Act was also to protect innocent third-party road users, he said in a 140-page judgement allowing appeals involving eight different motorists, of whom seven were injured in accidents.

  According to the report, of the eight appeals, five involved Pacific & Orient Insurance, Amgeneral Insurance, Allianz General Insurance Company, and Malaysian Motor Insurance Pool. The three-person bench, comprised of Rahman as well as Hasnah Mohammed Hashim and Rhodzariah Bujang, awarded RM150,000 in costs to each of the successful parties in the appeal.

  The appeals came about as the insurance companies had obtained a declaration in the High Court to nullify the policies of motorists due to allegations of misconduct on the part of the vehicle owners, the FMT report said. This action had denied accident victims monetary compensation that had been due to them, prompting the appeals.

  

  The appeals included a sambung bayar case, where the dispute arose when the vehicle owner attempted to claim on his vehicle following an accident.

  However, he had “sold” his vehicle to a third party through such an arrangement, with the insurance company being unaware of this. When it learnt about this, it then obtained a declaration from the High Court to nullify the policy of the motorist, citing misconduct on the part of the vehicle owner. Following this, the insurer refused to cover the vehicle owner’s loss.

  In another case, while the Sessions Court had found the driver of the other vehicle negligent after a full trial, the insurance company took a court order alleging it had been defrauded, and declined to pay the vehicle owner who was claiming for damages.

  The case victim was eventually found to merely hold a paper judgement, which the Federal Court said was “not even worth the paper it was written on,” continuing that it was unfair because the victim’s constitutional rights to be treated fairly had been infringed.

  

  Rahman said that all vehicle owners were required to have compulsory insurance coverage, because the law states that the road transport department would not issue road tax without insurance coverage. In the event of an accident, a victim injured by a vehicle could sue the vehicle owner, but with valid insurance coverage, the insurer (or insurance firm) would step in and provide the necessary compensation in damages to the victim on behalf of motorists.

  The Road Transport Act had to balance two competing interests. While it has to protect innocent third parties against the risks, it must also protect an insurance company from being victimised by fraudulent claims, Rahman explained.

  Ultimately, setting the balance between two competing interests still meant that the loss had to fall on one party, and the Federal Court ruled that such a loss should be borne by the insurer, in following the principle established by the 1959 Indian Supreme Court case of British India General Insurance vs. Capt Itbar Singh.

   

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• Sambung bayar case gone ugly – owner retakes pawned car with help of 12 men, no refunds for ‘buyer’

  In Local News / By Danny Tan / 30 July 2018 12:03 pm / 33 comments

  

  Heard of sambung bayar car deals where you pay attractive monthly instalments but drive a car that legally does not belong to you? As its name suggests, you’re continuing payment for the car’s owner, but get to use the car while you do so. Fair enough, no? Here’s a case of what happens when sambung bayar deals go sour.

  According to one Badrul Hanafi on Facebook, he obtained a car through sambung bayar and over the months has spent RM9,000 to service the loan and pay for road tax and insurance. He had all the documents too; “hitam putih complete” it was claimed.

  Then, the owner of the Proton Saga made contact to “redeem” back his vehicle, and lengthy negotiations ensued over WhatsApp, which Badrul shared screenshots of. Basically, he wanted a refund of the sum that he had paid over the months, which the owner sort of agreed, but refused to explicitly say so. They eventually decided to meet and “COD” (cash on delivery) in KL, which led to the events recorded on video.

  Instead of the RM8,500 that they settled on, the owner, who is a soldier, brought men, 12 of them including a very loud one who was eager to fight. And a tow truck to haul the car away. The mob did eventually get their way and Badrul ended up with no cash or car in hand. He came all the way from Johor Bahru, too. Naturally, he felt aggrieved and vented on FB.

  You’ve got to feel for him, and we do. But while he had “hitam putih complete” documents for the deal, the whole practice of sambung bayar is illegal, and his documents carry no weight in the eyes of the law. No matter what’s written it it, or how much money he has spent on the car, it legally belongs to the man who pawned it away – the soldier, in this case. Can you depend on the broker? We didn’t see much of him in the dispute above, did we?

  Obtaining a car via sambung bayar might seem tempting, cost wise, and easy, but it’s ultimately illegal. There are risks on the part of the owner too, should the new guardian of the car misses payments or if the car is used for illegal activity.

  

  In December 2017, the home ministry said that cases of sambung bayar are against the Hire-Purchase Act 1967. In a written reply to the Dewan Rakyat, it said. “Action can be taken against owners who pawn their vehicles or sambung bayar to third parties without the bank’s knowledge and approval.”

  Enforcement of the act is under the power of the domestic trade, cooperatives and consumerism ministry (KPDNKK). In Section 38 of the Hire-Purchase Act 1967, an owner who is found to have sold their vehicle while the hire purchase agreement is still in place could be sentenced to a fine of up to RM30,000 or three years in jail, or both.

  The ministry elaborated further, stating that it is aware of cases of pawnage or sambung bayar as a way out for vehicle owners unable to pay their monthly instalments to the bank. “A problem arises when monthly instalments for a car that has been pawned or sold through sambung bayar have not been paid, putting the named owner of the vehicle on the bank’s blacklist.

  

  

  “These cases cannot be categorised of vehicle theft, as there are no elements of theft as stated under Section 378 of the Penal Code. However, if the police has found elements of deception in its investigation, it will investigate the case under Section 420 of the Penal Code,” it said.

  What do we think of sambung bayar? It’s illegal and not worth it. My BM colleague Farid Awaludin puts it nicely.

  “Friends, in Malaysia, apart from the fact that there’s no car that can be imported without an AP and ‘cheaply’, there’s no law that can protect buyers of sambung bayar cars. The key is the geran; how is it possible to change the name on the geran when the bank loan hasn’t been fully paid?”

  “Remember, don’t buy Singapore cars, don’t be conned by those who say they can bring in cheap cars from Thailand, and don’t buy sambung bayar cars. If you have cash, buy a car that’s of the same value as your cash. If not, take a loan like everyone else. Stop dreaming of having a ‘nice but cheap’ car,” he said, while addressing another illegal way of obtaining a car that’s ‘nicer’ than what you can naturally afford – cars from Singapore.

   

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• Sambung bayar car sellers to be fined, jailed – report

  In Cars, Local News / By Jonathan Lee / 22 December 2017 10:18 am / 35 comments

  

  Vehicle owners who pawn their vehicles to a third party to cover their loans without the bank’s approval could be fined or jailed, according to a report by Berita Harian.

  The home ministry said that cases of vehicle pawning or sambung bayar are actually against the Hire-Purchase Act 1967, in a written reply to the Dewan Rakyat. “Action can be taken against owners who pawn their vehicles or sambung bayar to third parties without the bank’s knowledge and approval,” it stated.

  Answering a question by Segambut MP Lim Lip Eng, the ministry stated that enforcement of the act is under the power of the domestic trade, cooperatives and consumerism ministry (KPDNKK). In Section 38 of the Hire-Purchase Act 1967, an owner who is found to have sold their vehicle while the hire purchase agreement is still in place could be sentenced to a fine of up to RM30,000 or three years in jail, or both.

  The ministry elaborated further, stating that it is aware of cases of pawnage or sambung bayar as a way out for vehicle owners unable to pay their monthly instalments to the bank. “A problem arises when monthly instalments for a car that has been pawned or sold through sambung bayar have not been paid, putting the named owner of the vehicle on the bank’s blacklist.

  “These cases cannot be categorised of vehicle theft, as there are no elements of theft as stated under Section 378 of the Penal Code. However, if the police has found elements of deception in its investigation, it will investigate the case under Section 420 of the Penal Code,” it said.

   

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