If you’re an avid browser of listing sites, you may have come across the term ‘Sambung Bayar’. Many of you are familiar with what this is, but believe me, there was a point in time when this was a completely unknown term to me. I understood the concept, but didn’t understand why anyone would agree to getting into such an arrangement.
What’s the arrangement?
‘Sambung Bayar’ translates to ‘Continue payments’. What’s happening is the seller of a vehicle hasn’t yet completed his hire purchase term and wants to offload the car to a buyer. The buyer takes over monthly installments of the car, usually the buyer pays a small downpayment to the seller.
Legally, the car is still in the seller’s name until the end of the hire purchase term. At which point, the seller will do a name transfer. In the meantime, the buyer gets to keep and use the car as he sees fit. Maintenance is also the buyer’s responsibility.
As for insurance and road tax, this too is paid for by the buyer, but he may have to add his name to the list of insured drivers to get full coverage.
Why would anyone want such an arrangement?
Obviously, the seller is taking on a LOT of risk here. If the buyer stops sending in the monthly payments, he risks getting blacklisted by the banks. No matter how high one’s level of trust is with the buyer, this is an arrangement no one should get into.
So, why do sellers still offer ‘Sambung Bayar’ as a method of ownership?
Well, because you attract a larger pool of buyers and because it helps them service their loans. If you want to sell a car which isn’t paid off yet, you need to clear the loan + interest before the car can be transferred to the next owner legally. What happens if the remaining loan and interest is more than the car’s resale value? Well, then the seller has to top up extra cash just to get rid of the car and his future loan payments.
Instead of paying a huge 10% downpayment for the car, the buyer can negotiate with the seller for a ‘token’ downpayment of just a few thousand Ringgit.
Getting a bank loan on a used car with a favourable interest rate is tough. Getting a bank loan for any car is tough too. Some buyers just plain can’t afford it, while others genuinely have the assets, but they’re parked in overseas banks or the cash is ‘off the books’. Offering this method of payment opens up the possibility of car ownership to a new demographic of buyers.
Sounds good for buyers, should I consider buying this way?
No. The car is still registered in the seller’s name. Even when you’ve finished payments, he’s not legally obliged to transfer the car to your name. Sambung Bayar is illegal (more on this later) and so you can’t take him to court.
Should he pass away before the car is transferred to your name, you now have to convince whoever inherits ownership of the car to honour the original agreement. Good luck with that!
If you want a relatively new car but can’t get a loan, consider a car subscription. They’re perfectly legal, the down payments are very low and you don’t even have to be locked in for a long period. Providers such as Flux, Go Car Subs and Renault Subscription have you covered with a wide variety of vehicles.
Should you ever consider this option as a seller?
The short answer is no. It’s not legal, according to section 28 of the Hire Purchase Act 1967, as the bank technically owns the car. That would be akin to giving something away that doesn’t even belong to you in the first place.
If the buyer decides to stop making payments, there’s nothing you can do about it. Not only was it illegal in the first place, but you willingly gave him the cars and keys, and the police will don’t have to pursue the case.
However…
You could be a parent giving their child their first car. Taking over payments could be a good way to teach them responsibility while also giving them a slightly safer car than what they would otherwise have to settle for.
You could be looking out for a close family member or friend who really needs the help. If you’ve got an extra car you’re not using, it wouldn’t be insane to carry out some kind of ‘sambung bayar’ arrangement.
In either of these situations, you still shouldn’t treat it as a business arrangement and more like something you’re doing out of the goodness of your own heart. Be prepared to lose the car and continue payments anyway, should things go south.
