Do not use contracted assets as loan shark collateral: Chong

KUALA LUMPUR: Those who borrow money from loan sharks have been warned not to put their assets that are still contracted to their financial institutions as collateral in the event they are unable to settle their debts.
Without disclosing any figures, MCA Public Services and Complaints Department head Datuk Seri Michael Chong said he has received numerous number of such cases which eventually backfired on the borrowers when their banks took the matter to court.
He said in a lot of the cases, especially involving cars, the borrowers failed to retrieve their goods whether or not they settled their debts with the loan sharks.
"A lot of desperate borrowers give their cars and could never recover them. In the end, the banks sue them under the Hire Purchase Act 1967 for giving away the goods that are still under loan.
"If the car or other properties are under hire purchase, you have no right to give them away as you wish, unless you have settled your loan or gotten the consent of the financial institution," he said, here, yesterday.
Section 38 of the Act states that every person who, by the disposal or sale of any goods in a hire-purchase agreement, if found guilty, shall on conviction, be liable to a fine not exceeding RM10,000 or imprisonment for a term not exceeding three years or both.
Chong said a number of cases have also led to police involvement, as the cars were used by the loan sharks for criminal activities.
He said this in a press conference on his most recent case involving one 'Mr Choong' who put his 2010 Proton Saga up as collateral last year and has failed to recover it since.
According to Chong, Choong had taken RM10,000 loans from multiple loan sharks in May 2017 but only managed to repay half of the amount.
One of the loan sharks nicknamed "BM" had threatened Choong and his family and said he would hold on to Choong's car until his RM500 debt is settled.
However, in July that year when he wanted to settle, the lender was not reachable, and Choong's attempts to look for the car since proved futile.
He has since lodged a police report at the Subang Jaya police station on March 13.