The fiery fallout of car debt
Fast forward just two years, and the car's value plummets to RM180,000, but you still owe the bank the remaining RM230,000.
If you sell the car, you're still RM50,000 short.
You lose the car, but you will still be in debt.
For some, the pressure can be too much to bear, and that's where something unscrupulous unfolds.
For a fee ranging between 15% and 20% of the expected insurance payout, desperate drivers can hire a runner to 'handle' the problem.
The solution? The car is set on fire, pushed into a ravine, or stolen and chopped up – all made to look like an accident or theft.
'Some syndicates do this on a large scale,' said a source.
The source said such groups offer 'solutions' to those stuck in underwater loans.
'They even bribe mechanics, workshops, or tow truck drivers to help fake the damage,' the source added.
Owners will then make an insurance claim by declaring that their car was stolen or that it was destroyed in an accident.
If the insurer accepts this, the market value of the vehicle will be paid.
The payout then goes to the bank, which writes off the rest of the loan or claims it from the borrower, depending on the policy taken.
In this situation, the borrower gets away with not paying the remainder of the loan or at least delays it.
Vehicle Theft and Accident Reduction Council (VTAREC) coordinator Mas Tina Abdul Hamid said it is possible for individuals or syndicates to attempt a hard fraud scheme involving vehicles.
This is done by staging a vehicle theft, setting the vehicle on fire, arson or dismantling it to claim a Total Loss Payout.
'Insurance companies and Takaful operators are well aware of such fraud and have developed a robust detection method and powerful tools to prevent it.'
She said most of these fraud tactics no longer work, especially when it comes to burnt vehicles.
'Any sign of dishonesty on the part of the vehicle buyer can lead to claim denial, policy cancellation and criminal charges.'
According to figures from the General Insurance Association of Malaysia, some 47,325 private vehicles were declared a total loss out of more than three million accidents reported between 2022 to 2024.
Also for the same period, some 4,093 motorcycles and 2,727 commercial vehicles were declared a total loss.
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