Some people who have acquired vehicles through leasing in Sri Lanka are facing the situation of not being able to pay the monthly installments on time. Changes in income, rising cost of living and disruptions to business operations have made it difficult for some families and small business owners to keep up with loan repayments.
In this situation, attention has been paid to incidents of vehicles that fail to pay leasing installments being repossessed by finance and leasing companies. While leasing a vehicle, the main condition of the contract is to pay the monthly installments within a specified period.
In case of continuous arrears of installments, the financial institutions may take further action as per the terms of the agreement. As a result, vehicle-based businesses may lose their main source of income.
An important explanation has been released recently from the police side regarding this issue. Police Media Spokesperson Assistant Superintendent of Police F.U. Woodler said.
Vehicle owners who are forced to default
Many people who have bought a vehicle through leasing use the vehicle not only for personal trips but also as a means of income. For those who rely on a tricycle, car, van or small commercial vehicle for their daily business, going without a vehicle can lead to a direct loss of income.
When a person gets a vehicle through leasing, the monthly payment becomes a permanent expense in his income. Even if there is sufficient income to pay the amount initially, it may become difficult to pay the installment later due to declining career opportunities or increasing expenses.
After a few months of installments are overdue, there is a possibility that additional charges and interest may accrue along with the arrears. This can make it difficult to get the balance right again.
Actions to recover the vehicle may be taken while this condition persists. But it is important that the recovery of the vehicle should be done in accordance with the legal procedures.
In particular, the terms of the contract between the vehicle owner and the finance company, the amount due, and whether notice has been given may vary from case to case.
Therefore, it becomes important for someone who is unable to pay installments to go through his contract documents carefully and negotiate with the concerned company.
Legal process is essential when impounding vehicles
The police have made it clear that they have to follow the laws in force in Sri Lanka regarding the recovery of vehicles. According to the Police Media Spokesman, Section 27 of the Lease Funding Act No. 56 of 2000 states the procedures for repossession of items received under the financing.
Accordingly, it has been informed that there is a procedure to inform the concerned lessee before retrieving the vehicle, the officer in charge of the police station in charge of the area or the headquarters police inspector. This will allow you to get police assistance in recovering the vehicle.
At the same time, it has been informed that if acts such as trespassing into someone’s house and taking away the vehicle or seizing the vehicle by force, the police will take legal action in this regard.
This explanation is important for vehicle owners and financial institutions. Even if a party believes that it has a legal right to repossess the vehicle for non-payment of installments, the manner in which such action is taken must also be lawful.
In the past there have been several allegations of forcible taking of leasing vehicles. Therefore, both parties’ rights and legal procedures need to be taken into consideration in the vehicle recovery process.
Actions to be taken by vehicle owners
It is important for vehicle owners to get in touch with the concerned financial institution quickly rather than neglecting the installment for a long time once they become unable to pay the installment. Explain the problem with income and ask the company if there is a grace period for paying the arrears or any other contractual options.
Also, it is important to keep the letters, notices and other documents from the company regarding the vehicle repossessing process safe. These documents can be important if a legal issue arises later.
When authorities or company representatives come to repossess the vehicle, it is best to be clear about their identity and legal basis for action. If there is any suspicion of coercion or trespass, it is a safe practice to contact the appropriate police station instead of engaging in a personal confrontation.
Meanwhile, leasing companies also have a responsibility to deal with defaulting customers within the legal framework. Even if a situation arises where the vehicle is to be repossessed, the procedures for doing so should be transparent and legal.
Continuous data is needed on whether the number of vehicle owners struggling to pay their leasing installments is increasing in the current environment. However, since there is a risk of losing the vehicle in case of default, it becomes important to contact the finance company at an early stage and find a solution.
While a vehicle is a family’s daily necessities, for some it is also their sole source of income. Therefore, the issue related to leasing installment is not only a simple credit issue but can also be related to family income and livelihood.