Car Loans and Bankruptcy in Malaysia

According to a report in The Star, more than 500 people, mostly aged between 35 and 44 years, were declared bankrupt every month from January to May this year because they failed to service their motor vehicle loans

Once a person is declared bankrupt he will be restricted from, among others, traveling overseas, holding the post of a company director, and will have to give up his assets, including property and cars. He must contribute to the bankruptcy estate, and will only be discharged once the sum owed is settled.

Under the hire purchase agreement, the bank repossesses the car if the borrower defaults the monthly installments for three consecutive months.

It will sell off the car to recover the sum owed and if the amount still owed is more than RM30000 the bank will file a bankruptcy petition in the High court.

In the case where the sum owed is below RM30000 the bank will wait until the amount, with accumulated interest, balloons to RM30000 before filing the petition

How do you avoid a default in car loans and bankruptcy? Read 10 Tips to Avoid a Default on a Car Loan and Bankruptcy.