Auto Graveyard ahead

7 08 2008

A few days ago an interesting article was published in the Star newspaper. I brought me back to dark days just after the last recession in 97′. Here below is the article reproduced in full.

Banks to ease financial burden of customers


PETALING JAYA: Finance companies are resorting to restructuring car loan repayments to help ease the burden of customers with heavy financial commitments. At least three major banks will announce their hire-purchase loan restructuring plans soon.

A senior manager of a prominent local bank with a substantial volume of hire-purchase customers said that given the current economic scenario, where prices of fuel and food had increased, many customers would be burdened by the high repayment plans that they had signed previously.

Finance companies could not rule out that some customers might find it difficult to service their monthly instalments, he said.

“We expect that for next year there will be more repossession orders given, but it won’t be a drastic increase,” he said, adding that his company issued a monthly average of 2,500 repossession orders.

Most banks and finance companies will try to assist any customer whom they feel could fail to meet their monthly instalments.

The move is expected to bring cheer to thousands of hire-purchase customers, especially those paying high monthly instalments for their car loans.

A Perodua Kelisa owner, Jen Neoh, 29, welcomes an option to restructure her car loan, as it would ease her financial burden.

“I think it’s better to be in debt with a bank, rather than borrowing from friends, family or even loan sharks,” she said.

Neoh, who now pays almost RM400 for her monthly instalments, said she would be comfortable paying about RM200 instead.

A public relations manager in a large bank here said her bank was now very selective with new approvals for hire-purchase loans.

“And we have also started calling customers to help restructure their hire-purchase agreements to help them make ends meet,” she said.

Loan restructuring is commonly done by extending the account holder’s repayment period to lower the monthly instalment that needs to be paid.

“Many factors affect how much the refinancing would affect the new monthly repayment amount,” said a head of retail collection in Kuala Lumpur.

He said they included how much loan was taken in the first place and the customer’s financial status.

“But if they can’t pay, reduction is not a solution. They can always surrender their cars. But we will try to help them so that they won’t have to,” he said.

Federation of Consumer Associations adviser Datuk Hamdan Adnan said Bank Negara must step in and help consumers who have been threatened with having their vehicles repossessed.

“Banks always claim they are customer-friendly. But in reality, they exploit some customers,” he said.

If you only read the headlines or just gave the article a glance, you would think that things are not too bad and that the banks are helping people manage their finances by restructuring their car loans. But read the article again and pay careful attention to the 4th paragraph. A senior manager of A prominent bank (read as ONE), said his company issued a monthly average of 2500 repossession orders. Yes folks, TWO THOUSAND FIVE HUNDRED cars are being ordered repossessed by ONE bank. If the bank has a 30% success rate, that wpuld mean 750 owners lose the use of their cars every month. By years end, this one bank alone would have repossessed close to 4000 cars. He also says the numbers are set to increase next year. And what of the other financial institutions? How many are they repossessing now?

I still remember walking onto fields littered with repossessed cars, some had a few hundred cars lying rusting and baking in the open. A dead end for most of the cars that ended up there. An Auto Graveyard. I remember seeing cars hauled into such a lot while i was looking at the cars which were already resident in one particular graveyard. I could see briefcases and neckties still on the back seats of those cars. Most still contained personal effects of the owners and important looking documents. It’ll be interesting to see it happen all over again. Did you realise that automotive interest rates just shot up recently?

I hate to sound like I am taking advantage of someone else’s misery, but if you had cash and are in the market for a 2nd hand car, this would be a good opportunity to pick on up for a bargain. There is no way you could help the previous owners of these cars so why not make the best of it for yourself?




2 responses

8 08 2008

I have been asking around my friends about the fuel enhancement products. Their responses were negative. One of them told me that this product seems to be working pretty cool for the first few weeks, but eventually, this product will cause problem to our engine. First, it has the tendency to degrade various engine’s seals. Then, it will also contribute to the formation of slumps in engine will then block the pipelines, especially the lubrication pipelines. Worst scenario, you will need to overhaul your whole engine. I am not sure how effective is your product. Yours may be a positive one, who’s knows? Haha …
Cheers! :)

9 08 2008

so where can we see this auto graveyard?

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