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Articles Zero Downpayment scheme is illegal, declared by Ministry of Domestic, Trade and Consumer Affairs

Zero Downpayment scheme is illegal, declared by Ministry of Domestic, Trade and Consumer Affairs



In a harian metro report, all sales pitch addressing ‘zero down payment required’ for the purchase of new and used cars is against the law. This rule is set by the Ministry of Domestic Trade and Consumer Affairs (KPDNHEP). 

The zero downpayment strategy is an easy sales pitch to attract people to commit, especially in a downtrend economic environment. But, the ministry has clarified that this is against the rulebook. "There are dealers that have been found to manipulate a vehicle’s price via the selective naming of its model variant before offering the zero-deposit purchase method to customers. If buyers are required to make a down payment of 10% out of the vehicle’s price, it demonstrates the customer’s ability to service the monthly repayments, while helping to reduce his or her monthly commitments (compared to a zero-down payment scheme),” KPDNHEP Selangor officer Azman Adam commented.  

He added, "(the 10% down payment) helps the buyer avoid being blacklisted or declared bankrupt should the monthly repayments become too costly to bear. Companies that do not comply are punishable according to Section 31 (1) of the Hire-Purchase Act 1967."

The Hire Purchase rulebook states, under Section 31 (1) in the Hire-Purchase Act 1967, that “an owner who enters into a hire-purchase agreement without having first obtained from the proposed hirer thereunder a deposit in cash or in goods, or partly in cash and partly in goods, to a value not less than one-tenth of the cash price of the goods comprised in the agreement, shall be guilty of an offence under this Act.

The ministry now strictly adhered to the rulebook after conducting a 'zero % operation' on 35 dealers in the state of Selangor. A statement was released by the ministry after the operation, indicating that the zero downpayment scheme  was rather widespread. Eleven dealers in the state were promoting such scheme. The ministry then ordered an immediate decease of the 'zero interest downpayment scheme' to the dealers involved in implementing such scheme. Dealers are forewarned to stop any such scheme as ongoing investigation is conducted from time to time.


Source: Harian Metro and KPDNHEP

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