Hire purchase – give the true picture

LEON Lim, a young business executive with a multinational company in Kuala Lumpur, recently bought his dream car, which he will finance through hire purchase. He took a five-year loan based on new rates averaging 3.25%. From the surface, the rates looked fairly attractive.

After talking to his financial planner, he was shocked to discover that the actual or effective interest rate he was paying for the loan was in fact far higher than what was quoted to him at the onset. Truth is, Lim is one of the many others who are infuriated that they have been grossly misled. An analyst from a bank-backed brokerage said the practice of banks quoting “misleading” hire purchase rates is burdensome to consumers who are already grappling with tough times.