Suzuki Pakistan is withholding all KIBOR+3% compensation payments after June 2022 invoices

[salman_w]

Hi everyone,
READ THIS BEFORE YOU DECIDE TO GO FOR ISLAMIC BANKING FOR LEASING A CAR.
I will state my whole journey here for others to get guidance from. Even the installments payment etc.
This is my first ever post on Pakwheels and I feel blessed to be a part of this community.
This post is regarding a problem that I am facing currently while leasing Suzuki Alto AGS through Meezan bank. My car is now in booking and I have received the tentative date of 09-09-2-22. I have create this post for the following for my information and awareness of many other who do not have clarity like me in this matter. Following are the points i want clarity on:
1- Different car company practices of Compensation (KIBOR+3%) and their transmission to the actual customer in case of leased cars (Islamic banks and conventional banks).
2- Different bank policies on this matter. Do they pass on the favor to actual customer?
3- in whose favor (name) does the automobile manufacturer writes the compensation cheque?
4- Anyone who has actually received this compensation in case of a leased car?
5- Is it lawfully the right of customer to receive compensation in case of lease?
Right now I have been told by pak suzuki that the compensation cheque will be on Meezan Banks name and they should compensate me. My name will not be mentioned on sales order or the cheques. That leaves me on the mercy of the bank. I have requested my bank representative information on this matter but he tells me to wait when the delivery time comes near. I want to be informed about existing practices and whether my concern and demand is right or not. I believe that govt. has given this incentive to the end users and not the banks who are already benefiting by earning high profits on leasing cars due to high prices of vehicles and inability of customers to pay cash upright.
I want everyone's experiences from all auto manufacturers to be documented in this post so people can find out this info in one place. Also, references can be given to companies and banks to get lawful right of the costumer.
If any one has an experience from Meezan bank please do tag me in the reply and help me out.
Thanks for reading everyone, looking forward to an informative and knowledgeable discussion, hopefully a resolution on this matter.

[kaashiif]

It is because Meezan bank is Islamic bank and they don't give you car on lease instead they give on rental converting into ownership of you closely look car will also not be registered on your name and Islamic bank will not charge you for registration charges and those charges will be added to total amount and will be spread over rental period. In case of conventional bank car is registered on custome's name having HPA (Hire purchase agreement). So that maybe the reason Paksuzuki gave you this answer.

[salman_w]

Thanks for your reply. This might be the case. Although it's a technicality on which the end user is being devoid of their right. Lets see if other people have actually experienced this situation in person through an islamic bank. In that case people may get knowledge and avoid islamic banks altogether as they will lose money in the overall deal. Hopefully someone else can benefit.

[azfarnb]

I have heard suzuki is not honoring kibor + 3 rule - source pakwheels weekly.

IF they are going to honor it then the bank will compensate you for your total equity amount and keep the rest.

Example: if compensation is 10,000 and your equity was 30%, you’ll get 3,000 and the rest bank will keep - this is for islamic. In conventional, the customer gets the compensation completely since the bank starts charging the customer from first month while the islamic bank starts charging after 30 days of delivery of car.

[salman_w]

Thank you Azfar sb. for your valuable input. Can you please mention how you acquired this info as that would provide greater authenticity for common reader. Also suzuki representative told me that they will issue compensation cheque at the time of delivery with ethe sale receipt. Hopefully they honor it. Suzuki is still bound by law although banks are in the grey area.
p.s. not at all judging or questioning the credibility of info provided by you.

[abid110]

Also suzuki representative told me that they will issue compensation cheque at the time of delivery with ethe sale receipt.

i got delivery of alto on 7th Jan 2022 and received compensation cheque in mid April 2022. it usually takes around 2 months after delivery.

[salman_w]

I see, this was just what i was told on phone. May they were talking about the invoice of car that also comes after delivery. thanks for the info.

[azfarnb]

I have financed 3 cars over the past 5 years from bank alfalah islamic and the practice explained above is how the islamic car financing works.

Atlas and IMC were fair in distributing the compensation check while LMC is a gone case.

For grande’, 7 months delivery I/bank received 107k and for sportage 5 months delivery 9k and that too after 6 months lol.

[salman_w]

Thanks for confirming the info, Sorry for my ignorance but what is LMC?
Also lesson for anyone leasing from Islamic banks, they will never tell you this info before you lease. If Islamic bank is your option as the installments are fixed and not the religious reasons then go for conventional banking. Either way this factor comes into play.

[azfarnb]

Lucky Motor Corp = Kia Pakistan

[salman_w]

I see thanks. Hopefully someone with suzuki or meezan bank experience can also share their info.

[crema]

As this Kibor+3% is the rent of the money which is actually termed as interest. As Meezan bank do not endorse interest hence they would dispose the recieved interest to charity organizations. Same they claim to do (give to charity) regarding the penalty they charge to their customers against delays in rental payments etc.

There are very very thin chances that they pass this interest amount to you and for sure their charity organizations will be eyeing on it before you have started thinking about it as it is their bread and butter to leach on any source of spare income.

[kjohn_18]

Got alto vxl through bank alfalah. Compensation cheque was issued in the name of customer. Delivery jan received cheque in april. Dealership sent that cheque to the bank instead of giving it to customer. Bank kept that cheque and issed their own new cheque of same amount and almost took 1 month to hand over that compensation cheque to me. Dont know how this amount was calculated. In my opinion suzuki should share the basis of calculation also in the email or enclosed letter.

[salman_w]

Thanks for the point of view. This is an age old debate, what is and what isn't interest. I think it all matters on if the fatwa they have says its interest. do you have experience with Meezan bank and this compensation?

[salman_w]

In a post above it is said that the amount is the KIBOR+3% of total amount. This is a big sum. Govt has set this to safeguard customers and to punish auto makers for taking bookings well in advance or failing to deliver in govt. said period. KIBOR just covers inflation while 3% is penalty.

[crema]

Thanks for the point of view. This is an age old debate, what is and what isn't interest. I think it all matters on if the fatwa they have says its interest. do you have experience with Meezan bank and this compensation?

No I dont have experience of financing from Meezan Bank.
Though i have read the penalty clauses and its reason somewhere which I mentioned in my previous reply.

But surely they have Fatwa for the amount recieved as compensation of holding an amount is Interest.

Being considered as interest it will be channeled to their leeches. This is what I can comprehend from their policy. It may be different in actual.

[kjohn_18]

Yes i know kibor plus 3%. I watched a few videos on youtube regarding compensation. I was expecting more for my alto thats why i was very much interested to know the basis of calculation. However, I got justified amount for my honda city.

[salman_w]

In conventional banking hopefully you will receive compensation after some emails to Paksuzuki. On an alto thread i was reading many got their due cheques. Its Islamic banking where i am concerned about uncertainty in rules.

[salman_w]

Thanks for sharing your knowledge brother. much appreciated.

[salman_w]

Update:
I had earlier asked the representative from bank to check about the process of receiving compensation in case of late delivery. He finally got back to me a couple of days back. Tells me that as the car is registered in banks name and you are renting it, the bank will receive the compensation and I won't. I immediately replied to him, from the knowledge I got from this thread that I know other Islamic banks give compensation based on the initial payment by the actual customer. His reply was that other islamic banks do consumer banking on the basis of diminishing musharaka type of contract in which the car is booked on the name of the actual customer and we (Meezan bank) do on basis of Ijara agreement in which the bank owns the car and i only have usage rights.
upon receiving this info. I told him that i don't care what type of agreement (technicality) it is, I know the fact that govt. has made the rule of compensation only for the benefit of end user and not for banks or Auto Manufacturers to benefit. The law is there to safeguard end users and to prevent overbooking and long waiting times. I told him that i wanna launch a formal complaint with the bank if they don't pass on this compensation to the actual customer and should have disclosed this earlier as i would have preferred conventional banking then.
Upon this he redacted and told me that he will talk about it with the higher ups and also said that it's so early still and there is so much time in delivery. Basically giving me a lollipop. well, he doesn't know me I am not gonna let this go.
So, this shows that banks eat this compensation whole if one does not ask. I urge everyone reading this thread to stand up for your right. It might take extra effort but this is the only way big corporations would understand not to fool customers out of their lawful right.
p.s. The details shared above are for the knowledge of the readers and i am stating events as they happened. If anyone has more clarity on the topic or has experience with meezan bank and or receiving compensation from other islamic banks or meezan bank please reach out and share for the sake of awareness of all.
Thanks for reading.