KOTA KINABALU: A transition period may be given to hire purchase providers to adjust their systems and meet new requirements of the Hire Purchase (Amendment) Act 2026, which will come into force on June 1, says Datuk Armizan Mohd Ali (pic).
The Domestic Trade and Cost of Living Minister, however, said providers that are ready may begin offering hire purchase agreements under the new amendments once the law takes effect.
He said the amendments also abolish the flat interest rate and the Rule of 78 method, under which a large portion of early loan instalments is used to pay interest while only a small portion goes towards the principal.
“This result in borrowers who wish to settle their loans earlier having to bear a high outstanding balance that does not reflect the actual cost of the loan,” he told reporters at the National Consumer Day 2026 celebration, Bernama reported.
The Act was gazetted on Jan 30.
The amendments also support digital transformation by allowing the use of technology in hire purchase agreements, including digital signatures to improve efficiency in the agreement process, the minister said.
Armizan said the amendments form part of the consumer movement agenda for 2026, which focuses on legal reforms related to consumer rights and interests.
Among the measures introduced since last year is the strengthening of the legal framework governing the consumer credit ecosystem.
“This includes the enactment of the Consumer Credit Act 2025 (Act 873) which was passed last year,” he said.
Act 873, regulated by the Ministry of Finance, came into force on March 1.
Armizan said the legal reforms reflect the government’s commitment to create a more transparent and accountable credit ecosystem, improve industry governance and safeguard the rights and interests of consumers nationwide.
