Banks charging massive repo costs

The economic recession has forced banks to take precautions against potential non-performing loans -- including hiring repossession companies to go after those who default on auto loans.

Accompanied by KMT Legislator Apollo Chen (陳學聖), Chang Li-wei (張立偉), who took out an NT$100,000 auto loan from Macoto Bank (誠泰銀行) last November, yesterday accused the bank of charging "unreasonable repossession fees."

After having missed three monthly payments of NT$24,000, Chang said he was told to pay up NT$35,000 if he wanted to reclaim his repossessed car, which the bank forcefully towed away without his consent.

Chang later negotiated the repossession fee down to NT$25,000 before he could get his car back.

Shortly afterwards, Macoto asked Chang to clear all loan payments in advance while charging him another NT$1,000 in cash for breaching the contract.

"It's just too expensive to have the car towed at a one-time cost of almost one fourth of the principle, which strikes me as a lot," Chang told the press conference yesterday morning, adding that the bank's receipt failed to give a detailed breakdown of the actual repossession costs.

With banks claiming their repossession mechanisms are in accordance with the law, Legislator Chen yesterday attacked banks for picking on the "little guys" and urged all loan takers to carefully read through contracts before signing.

"After failing to collect debts from big-time entrepreneurs, banks only take on little people and steal their money," Chen said, adding that more than 14 similar petitions have been filed this year while many may have remained silent.

Henry Lin (林明輝), an attorney at LEO Office (理昂法律), yesterday said that Macoto may have nullified its own contract terms by laying down repossession fees that are disproportionate to the principle amount, according to the consumer protection law.

Lin also argued that forcefully confiscating private properties without court orders was a violation of the Civil Law.

Wang Te-ming (王德明), a consumer ombudsman from the Cabinet-level Consumer Protection Commission, yesterday disagreed with Lin, saying that banks are entitled to repossess if overdue payments went over one fifth of the principal, citing a property trade law.

Wang, however, added the law needs to be revised to better safeguard consumers' rights.

As of the press time yesterday, Macoto had failed to respond to Chang's accusations, saying the bank is still looking into the dispute.

But other bank officials argued that "repossession costs are high and have nothing to do with how much clients owe banks."

"NT$35,000 is a standard charge for a one-time tow. It takes repossession companies a great deal of manpower to locate the cars," a bank manager surnamed Hsieh yesterday told the Taipei Times.

Hsieh added that banks would usually notify their clients before taking action. If they turn in the collateral as requested, clients won't have to bear any repossession costs before they pay up overdue loans, Hsieh added.

Another bank official, surnamed Lin, yesterday said that whether or not repossession costs are too high, remains debatable -- but banks should make such fines clear from the beginning, lest any dispute should arise.

Two legal repossession companies contacted by the Taipei Times yesterday refused to discuss their operations or comment on Chang's case.