Malaysia’s banking industry is lining up a new round of “goodwill discounts” for motorists who want to settle older hire-purchase loans early, ahead of a major legal shift that scraps the flat-rate and Rule of 78 method for new agreements.
In a joint statement, The Association of Banks in Malaysia, Association of Islamic Banking and Financial Institutions Malaysia and the Association of Development Finance Institutions of Malaysia said banks would apply the discounts at the point of early settlement for existing fixed-rate hire-purchase agreements and/or those that use the Rule of 78 method, once the Hire-Purchase (Amendment) Act (HPAA) takes effect.
The move follows the Hire-Purchase (Amendment) Bill being passed by the Dewan Negara, and is meant to give affected customers treatment that is broadly comparable to what new borrowers receive under the HPAA.
Who qualifies? The industry said the programme covers individuals and micro or small businesses with relevant agreements signed before the Act starts, or during the 18-month grace period, provided they settle before maturity.
Accounts must also not be more than 90 days in arrears, under legal action, subject to repossession orders, or already in formal restructuring or debt management.
The effective date is expected in Q1 2026, and the programme is projected to run for as long as nine years, tracking maximum vehicle-financing tenures. Customers who keep paying to term “do not need to take any action,” the groups added.
