Repossession for Failure to Pay Instalments in Singapore

Hire-purchase contracts almost inevitably contain repossession terms, allowing the owner to repossess the goods in the event that the hirer breaches the contract. Such breaches may include failing to pay the instalments on time or damaging the hired goods.

Singapore’s statutory laws that regulate repossession can be found in the relevant sections of the Hire-Purchase Act.

There are some general rules on repossession in Singapore that must be adhered to:

1. The owner must notify the hirer, using the prescribed form, that the goods will be repossessed unless payment is made. The owner must give the hirer at least 7 business days to pay the arrears before commencing repossession.
2. Upon repossession, the owner must inform the hirer of the details of repossession. A sample of this document can be found here. This document will also inform the hirer of the sum of money he has to pay in order to reclaim the goods.
3. The owner, having repossessed the goods, cannot dispose or sell the goods for 7 business days. This is to allow the hirer sufficient time to pay the arrears owed.
4. The hirer must now either inform the owner of his intention to repay and request for the return of the repossessed goods. He may also demand that the owner sell the goods to a person appointed by the hirer (such as a friend of the hirer). Alternatively, he may choose to do nothing and allow the owner to sell the goods.
5. After selling the goods, the owner is still entitled to claim any shortfall from the hirer, if the value of the goods at the time of repossession is insufficient to cover the arrears under the agreement, amongst other charges.
6. However, if the value of the goods exceeds the sum of arrears owed by the hirer to the owner, the hirer may be able to claim this excess amount from the owner.

If you require more information on the laws governing car financing in Singapore, you can refer to our guide on buying a car in Singapore.