PETALING JAYA: The Hire Purchase (Amendment) Act 2026 could have been helpful if it applies to existing borrowers, especially with the rising cost of living.
For creative writer Nuratikah Muhammad, she said her loan will not be covered under the new guidelines since it was taken a few years ago.
“It would have been great if we were covered as well.
“I’m trying to be more careful with spending and may consider refinancing if there are better options,” said the 31-year-old from Kuala Lumpur.
The Act, which was gazetted on Jan 30 and will come into force on June 1, is aimed at strengthening consumer credit fairness and modernising hire purchase agreements.
The amendments also abolish the flat interest rate and the Rule of 78, under which a large portion of early loan instalments is used to pay interest while a small portion goes towards the principal.
Public relations consultant Zuliana Yassin, 55, from here, said she doesn’t really see much difference as the interest rates don’t vary much between fixed or variable.
“I settled my old car loan with the bank before I applied from another bank. This is due to my age which makes it difficult for banks to give me a higher loan.
“My priority was ease of payment and loan flexibility,” she said.
Senior communication executive Fazilah Kamal, 33, from Ampang, also said there wasn’t much difference in instalments.
“I had a Perodua Myvi which I did a full settlement for and got a RM3,000 rebate.
“The new and old loan schemes do not affect me much,” she said.
Licensed financial planner K. Gunaseelan said for those with an existing car loan, they are still on the old system where most of the interest is paid upfront.
“If you decide to settle early, you don’t save as much but new borrowers will get a fairer deal.
“Some people might look into refinancing. Otherwise, you can just continue paying as usual since your monthly instalment doesn’t change.”
Gunaseelan said borrowers can consider early settlement with discounts offered by the bank.
Meanwhile, Federation of Malaysian Consumers Associations chief executive officer Dr Saravanan Thambirajah said the amendments represent a long overdue reform that addresses structural weaknesses in Malaysia’s consumer credit framework, particularly in the way vehicle financing has historically been structured.
He said for many years, consumers have been subjected to a system based on the flat interest rate and the Rule of 78, which effectively front-loads interest payments.
“From a consumer perspective, this reform introduces a fairer cost of borrowing.
“Under the new framework, consumers will no longer be penalised for making early repayments as the interest charged will reflect the actual duration of the loan,” he said.
“This not only reduces the overall financial burden on borrowers but also encourages better financial discipline, allowing consumers to manage their debts more responsibly.
“Over time, this can contribute to improved household financial resilience, particularly in a context where many Malaysians rely on hire purchase financing for essential assets such as vehicles.”
Additionally, Saravanan said the amendments signal a broader effort to strengthen consumer protection within the credit ecosystem by modernising the legal framework and aligning it with the Consumer Credit Act 2025.
The reforms, he said, aim to ensure greater accountability among lenders and promote more responsible lending practices.
“This is particularly important in addressing concerns related to over-indebtedness and ensuring that financing products are structured in a way that does not disadvantage consumers.
“However, the success of the reforms will depend on effective implementation, continuous monitoring and sustained efforts to improve financial literacy among consumers,” he said.
