- Volks Auto, Exodus Global, TLC Cars Singapore, Royal Automotive, and now Manhattan Motors. In the past few years, there have been a trend of various car dealers winding up suddenly, leaving consumers and financing companies in the lurch.
- The car dealer purchases the vehicle from a source, sometimes with the funds for the purchase funded by a financing company. The car dealer, having physical possession of the vehicle, proceeds to sell the vehicle to an unwitting consumer and collects a deposit or even full cash payment for the vehicle.
- However, the cash payment is not forwarded to the finance company. Furthermore, the title of the vehicle remains with the car dealer or finance company. Even after the consumer gains physical possession of the car, the ownership is not transferred to the consumer.
- Eventually, when the car dealer winds up, consumers are left in the lurch as they have paid money for a vehicle they technically do not own.
- Under the Road Traffic (Motor Vehicles, Registration and Licensing) Rules, the owner of the vehicle or transferee or must, within 7 days after the transfer of possession of the vehicle make an application for the transfer to the LTA. If this is not performed, both the owner of the vehicle and the transferee will be guilty of an offence.
Furthermore, certain insurance policies contain a clause indicating that the insurance cover is conditional upon the transferee having the vehicle registered under them. In the event that an accident occurs, consumers may run the risk of having the insurance company deny the consumer’s claim.
Further, it is possible the registered owner of the Vehicle that had paid good money for the Vehicle may also exercise their right of possession over the Vehicle
How to Protect Yourself
- Reduce your financial risk exposure of a default by negotiating a smaller deposit.
Always ensure that proper records of payments made for a vehicle are kept, and always issue funds via an ascertainable method (bank transfer with remarks, crossed cheque payable to the company with corresponding bank transaction records) instead of an untraceable method such as cash, or a cash cheque.
Upon the transfer of the title of a vehicle, LTA will forward the transferee a letter confirming that the vehicle has been transferred. As such, consumers must be vigilant, and ensure that they receive confirmation from LTA that they are the rightful owners of the vehicle.
Another method will be to login to the LTA website with your Singpass and perform an asset check to ensure that the Vehicle is registered under your name.
Our lawyers are experienced in vehicle title / financing disputes, and are well-equipped to advise you on such matters. Please feel free to contact our firm should you wish to find out more.