What is a procedure of trade-in for a new car
Tuesday, October 30th, 20071) I think you need to be concerned about the matter of the outstanding
loan and transfer of ownership. Tell him that you want to have confirmation
that the loan is settled and that you are no longer liable after you hand
him the car. If he is not cooperative, ask him how he will guarantee you
that you will not face the nightmare later on that you read about where
owners hand over their cars believing the loan will be settled and some
years later, they get sued because the dealer never settled it. I feel that
if this dealer is an authorised Honda dealer, he should have a professional
process that protects the customer as well as himself and will do everything
properly.
2) You should not accept just a letter but say you want to go with the
salesmen to the bank to settle the matter. Prepare a letter informing the
bank of your intention to trade-in the car to the company concerned and that
you understand they will settle the outstanding loan and hand it over
personally together with the salesman. Get some sort of receipt of the
letter (ask them to chop and sign a photocopy). But you still need to
understand that even though you sent them such a letter, until and unless
the loan is settled, you will still remain liable as far as they are
concerned. Sure, you can say that you informed them of the move but from the
legal point of view, they have nothing to do with the dealer at all and you
are the one who signed the contract with them, so they will go after you.
3) By law, when you hand over the car to the dealer, the ownership should be
transferred to the dealer immediately. But many dealers don’t do this
because it involves a fee and also adds another owner to the car, so they
often do not transfer and wait till there is a real new owner who buys the
car and then they transfer. But what sometimes happens is that the new owner
also doesn’t bother (either due to ignorance or purposely) and so the car
remains in your name in JPJ records and any offences will still be charged
to you. Therefore, what you should do is to prepare a letter to the dealer
where you state that you have handed over the car to him at the time/date
and that he will be responsible for any offences relating to the car after
that time/date. At the same time, send a letter to the JPJ to notify them
that you have handed over your car to the dealer (details of address) who
will transfer ownership and that you have signed the necessary documents for
the transfer. Send by registered mail and keep the receipt. This will
provide some protection if the dealer does not transfer it and something
happens.
This is the advice I give you in good faith but I cannot be responsible for
any effects arising from you following any or all the advice I have provided
in this e-mail.
Regards
** Original Mail from Chips . Thanks you 
When you trade in your car and there is an outstanding sum on the H-P loan, the new car dealer should first check the exact amount. Then the salesman will work out the amount which has to be settled and see if there is enough left over after that settlement to cover the d/payment on the new car, based on the value you are offered. If not enough, then you have to come out with extra cash.
The big companies have enough financial strength to settle the H-P loan but small dealers usually don’t. They have to quickly sell off your car to a used car dealer and then take the money to cover the downpayment required. Sometimes, they may have financial problems so the surplus money from the used car dealer may be used to settle their own financial problems - and then they find they can’t settle your outstanding loan. By then, you are gone and you assume everything is settled until a few months later when the finance company starts to send its threatening letters because instalments have not been paid.
In all the time I have been trading in cars, I have dealt with big reputable companies so I have never had any problems. In fact, in all the cases, I signed transfer forms and left it to the dealer to handle. The only problems I have had have been getting saman sometimes which were for cars I no longer owned. I suspect this was because the JPJ database was not updated rather than the dealer not transferring ownership. Usually I just sent back the saman with a note stating when I had sold off the car and to ask the JPJ to go after the dealer to find out who the next owner was. And I usually never put a stamp so if PosMalaysia wanted to fine anyone, it had to be the recipient.
Chips Yap
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