Car Repossession in Singapore: Know Your Rights and What to Do

Losing your car to repossession can be overwhelming, especially when it disrupts your daily routine and adds financial stress. Understanding the reasons behind it and taking proactive steps can help you regain control and find a way forward.

Let’s discuss how to navigate the situation and plan your next steps effectively.

You may not always receive a repossession notice in advance

In Singapore, the Hire-Purchase Act (HPA) ensures that owners follow specific rules before repossessing goods. Under the HPA, if you default on your car payments, owners (the person or company who originally owned the goods and receives the monthly payments) are required to issue a default notice giving you at least seven business days to rectify the breach. 

While the standard procedure in Singapore requires owners to provide a written notice and a waiting period before repossessing a car due to missed payments, there's a crucial exception. 

This exception comes into play when the owner reasonably believes the car hirer, in this case, you, the driver, is planning to conceal or relocate the vehicle to prevent repossession. In such cases, the owner is legally permitted to take immediate action without any prior notification.

However, it's essential to understand that the owner cannot simply claim this exception without justification. They must be prepared to provide evidence demonstrating that they had legitimate grounds to believe the car owner intended to hide or move the vehicle. 

Owners can take the car — but not your personal belongings

During repossession, owners have the right to reclaim the car but must schedule a time to return any personal items left inside. This means your valuables, such as documents, gadgets, or other belongings, cannot be withheld by the car company.

To safeguard your belongings, it’s good practice to remove any valuable items from your car as soon as you receive your repossession notice. Staying prepared can help you avoid additional stress during an already challenging time.

Repossession must not involve property damage

Repossession agents in Singapore are required to follow strict rules when reclaiming goods. They are not allowed to damage any property or force entry during the process. This means that repossession must be conducted peacefully by the assigned debt collectors and without causing harm.

If you notice any damage caused during a repossession, you have the right to file a complaint and seek redress under Singapore’s laws.

Agents are not allowed to use threats or force

Repossession agents are prohibited from using intimidation, harassment, or threats to recover a vehicle. The Protection from Harassment Act in Singapore provides clear protection against such behaviour.

If you experience any form of harassment during the repossession process, you can report the incident to the authorities and Credit Collection Association of Singapore (CCAS). You can also seek advice from a lawyer if you consider taking legal action against the harassment.

» MORE: Things to know about debt collectors in Singapore

As mentioned, in Singapore, the owner must provide a written notice of repossessing a vehicle at least seven days in advance. The HPA also mandates that the hirer be informed of their entitlements as outlined in the Third Schedule, which includes the right to request, in written form, a copy of the hire-purchase agreement and/or the account statement. Once repossessed, the owner must provide details of the repossession and the amount needed to reclaim the goods. 

The goods cannot be sold for at least seven business days, allowing the hirer time to pay the remaining debt, appoint a buyer, or take no action. If the goods are sold, any shortfall can be claimed from the hirer, but the hirer may claim any excess if the goods' value exceeds the arrears owed.

Clarify the reason for the repossession

If your car has been repossessed, the first step is to understand why it happened. Review your hire-purchase or loan agreement carefully to check for any clauses that may have been breached that could result in your car being repossessed. 

You can also request an explanation from the owner to clarify the reason for the repossession. This will help you determine whether it was due to late payments, non-payment, or other issues specified in the agreement.

Explore options to get your car back

If you wish to reclaim your vehicle, there are several options available in Singapore:

One of the most straightforward options is to pay the amount of money associated with the repossession process. This will allow you to reclaim your car and regain ownership.

You can also try refinancing your car loan to make your instalment payments more affordable and manageable. ​​To refinance your car loan, start by assessing your eligibility and exploring tailored loan options with a refinancing expert. Once approved for a new loan covering your existing loan balance, use it to pay off the current loan. 

You'll then begin repayments on the new loan, which typically offers lower interest rates or more flexible terms, making repayments easier or more affordable. Refinancing services often provide free assistance with paperwork, LTA processing, and bank coordination to ensure a smooth process.

If you believe the repossession was unjust or if you’re unable to come to an agreement with the owner, seeking legal advice or using mediation services could help resolve the situation. Professionals in Singapore, like financial counsellors or legal experts, can guide you through the process.

Can you afford the ongoing costs — insurance, fuel, and maintenance?

Before deciding to reclaim your car, it’s crucial to assess whether you can afford the ongoing costs of car ownership. Owning a car means you have to consider the car's expenses, which include fuel, insurance, road tax, parking fees, and regular maintenance. 

Ensure you have the financial capacity to manage these costs over time. If not, it might be worth considering alternative transportation options that fit better within your budget.

Do you have access to reliable public transport or carpooling?

If the costs of car ownership are too high, consider whether public transport or carpooling can meet your daily commute needs. Singapore’s public transport system, including the MRT and buses, is extensive and reliable. 

Ride-hailing services like Grab or Gojek also offer convenient options. Depending on your lifestyle and work requirements, exploring these alternatives may be a more cost-effective solution than reclaiming your vehicle.

Are you considering bankruptcy as an option?

If the repossession is part of a larger financial struggle, it may be worth considering options like bankruptcy, a Debt Repayment Scheme (DRS), a Private Arrangement, or a Voluntary Arrangement (VA). These legal frameworks are designed to help individuals manage overwhelming debt and restructure payments. 

Before pursuing this route, it’s essential to seek professional advice from a legal expert or financial counsellor. They can provide guidance on the best course of action and explain the potential long-term consequences. For more information, you can refer to Singapore’s legal resources or counselling services.

» MORE: What you need to know about bankruptcy in Singapore

If your car has been repossessed and sold, it’s important to find out if you still owe any money after the sale. Especially if it’s sold for less than what you owe, the owner can still ask you to pay the remaining amount, including any extra costs.

You can request a detailed breakdown from the owner for the remaining loan balance, any fees associated with the repossession, and any deficiency (amount still owed). 

This information will help you fully understand your financial obligations and prevent any unexpected charges.

Rebuilding your credit after a car repossession requires consistent effort and discipline. 

Start by prioritising timely payments for all your financial commitments, such as loans, credit cards, and utilities, as regular payments will gradually improve your credit score. 

If you're feeling overwhelmed, consider seeking help from Credit Counselling Singapore, which offers services to assist with debt management and budgeting.

Additionally, regularly monitor your credit report through Credit Bureau Singapore to track your progress and ensure accuracy. Finally, avoid taking on new debt until your current obligations are under control, allowing you to focus on rebuilding your financial health step by step.