PETALING JAYA: Car loan borrowers are breathing a sigh of financial relief as fixed-rate car loans are set to be a thing of the past with the passing of the Hire-Purchase (Amendment) Bill (HPA) in Parliament on Dec 1.
This news follows the announcement from Malaysia’s banks that they will provide goodwill discounts to existing borrowers who opt to settle their fixed-rate hire-purchase loans early once the HPA comes into effect, which is expected in the first quarter of 2026.
Under the HPA, interest payments on hire-purchase loans, such as those for cars, will be calculated based solely on the current outstanding loan amount for each payment.
This marks a departure from the current system, where interest rates remain fixed for the entire duration of the loan.
Philip Quek, 24, said he is considering paying back more of his current over RM40,000 car loan earlier once HPA and the goodwill discounts come into effect.
“I was supposed to pay it back over the next seven years, but if HPA or the goodwill discounts can lower my loan interest rate by a significant amount, I will definitely consider making higher early payments.
“Especially since I don’t have much else to pay for now, lowering my loan interest rate early on will allow me to save more money in the long term so I can use it for emergencies,” he said.
The quantity surveyor from Johor added that he plans to also use the extra long-term savings for his future goals, such as owning his own home.
Event manager Lee Lin Quin, 34, said that while she doesn’t have the extra income to make more early payments to lower her current car loan interest significantly, she is glad that HPA will allow her to save some money.
“Right now, I pay about RM950 a month in interest alone, so once HPA comes into effect, having the monthly interest decrease even by a bit will be good enough for me.
“This will allow me to have more disposable income slowly over time as I make payments so I can use it for other stuff like going overseas for a well-needed vacation,” she said.
