Hire-Purchase (Amendment) Act 2026

This Act comes into operation on a date to be appointed by the Minister by notification in the Gazette and the Minister may appoint different dates for the coming into operation of different provisions of this Act.

by deleting the definition of “base lending rate”;

by inserting after the definition of “dealer” the following definitions:

‘ “effective interest rate” refers to—

a rate that reflects the actual finance cost of a hire-purchase in the case of a hire-purchase agreement where the terms charges are at a fixed rate; or

a rate that reflects the actual finance cost of a hire-purchase which is determined by using the reference rate as a benchmark in the case of a hire-purchase agreement where the terms charges are at a variable rate;

“electronic” has the same meaning assigned to it in the Electronic Commerce Act 2006 [Act 658];’;

by inserting after the definition of “prescribed”

the following definition:

‘ “reference rate” refers to the benchmark interest rate that forms the basis for determining the pricing of variable rate financing facilities, whereby the benchmark rate is the published prevailing overnight policy rate;’; and

by deleting the definition of “statutory rebate”.

Amendment of section 4

by deleting the words “by delivering it in person”; and

by deleting the words “under his hand”.

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prior to entering into a hire-purchase agreement, the owner shall undertake the necessary due diligence to verify the identity of the intending hirer; and

the owner shall keep proper records on the due diligence process undertaken and the records shall be kept for at least seven years from the date of the hire-purchase agreement.”.

Amendment of section 4c

by substituting for subparagraph (1)(c)(viii) the following subparagraph:

“(viii) the effective interest rate for terms charges;”;

and

in subsection (1b)—

by substituting for the words “base lending rate”

the words “reference rate”; and

For the purposes of subsection (1b), the owner shall ensure that the hirer has consented in writing to the use of such electronic form and its effective service.”.

in the shoulder note, by substituting for the words

“base lending rate” the words “effective interest rate”;

in subsection (1)—

by substituting for the words “base lending rate”

the words “effective interest rate”; and

the revised effective interest rate; and

the revised amount of instalments or the revised number of instalments, as the case may be.”;

and

in subsection (2), by substituting for the words “base lending rate” the words “effective interest rate”;

by substituting for subsection (3) the following subsection:

“(3)  Where the owner has revised the effective interest rate, he shall serve a notice to the hirer fourteen days prior to the date the revised effective interest rate comes into effect specifying the following:

by inserting after subsection (3) the following subsection:

“(4)  An owner who contravenes subsection (3) shall be guilty of an offence under this Act.”.

Amendment of section 6c

in the shoulder note, by substituting for the words

“base lending rate” the words “effective interest rate”;

and

by substituting for the words “base lending rate” the words “effective interest rate”.

Amendment of section 14

by deleting subsection (2); and

by inserting after subsection (3) the following subsection:

“(4)  For the purposes of this section, “net balance due”

means—

the outstanding amount financed; and

terms charges accrued and calculated up to the next due date of payment or the day specified in the notice, whichever is later, less any surrender value of a contract of insurance where—

the contract of insurance is taken to cover the amount financed;

the outstanding amount financed; and

the contract of insurance is taken to cover the amount financed;

the premium for the contract of insurance is paid by the hirer in instalments to the owner; and

Hire-Purchase (Amendment)

the surrender value is received or will be received by the owner upon cancellation of such contract.”.

Amendment of section 18

by substituting for paragraph (1)(b) the following paragraph:

“(b) the hirer may recover from the owner, the difference between the value of the goods and the balance outstanding under the hire-purchase agreement, if any, at the time of the owner so taking possession of the goods.”;

by substituting for subsection (2) the following subsection:

“(2)  Where the owner takes possession of any goods comprised in a hire-purchase agreement, the owner is not entitled to recover any sum, whether under a judgment, an order or otherwise, which exceeds the balance outstanding under the hire-purchase agreement.”;

by deleting paragraph (3)(a); and

by substituting for paragraph (3)(aa) the following paragraph:

“(aa) the balance outstanding under the hire-purchase agreement is—

the outstanding amount financed; and

the contract of insurance is taken to cover the amount financed;

the premium for the contract of insurance is paid by the hirer in instalments to the owner; and

the surrender value is received or will be received by the owner upon cancellation of such contract; and”.

Amendment of section 43

by deleting the word “or” at the end of paragraph (a);

by substituting for the full stop at the end of paragraph (c)

the words “; or”; and

by inserting after paragraph (c) the following paragraph:

“(d) by telegram, facsimile transmission or by any other electronic or other means of transmission which results in the notice or document being transmitted in writing.”.

Amendment of section 45

by substituting for paragraph (b) the following paragraph:

“(b) that is in a font size smaller than the type known as ten-point Times; or”; and

by substituting for paragraph (c) the following paragraph:

“(c) that is not in black font,”.

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in subsubparagraph 4(a)(i), by substituting for the word

“Rate” the words “Effective interest rate”;

in subsubparagraph 4(b)(i), by substituting for the word

“BLR” the words “reference rate”;

by deleting the words “Annual Percentage Rate**”

and the words “RM……………………..” appearing against it; and

in the note column, by substituting for the word “BLR”

the words “reference rate”.

freight, if any;

vehicle registration fees, if any; and

insurance, if any, expressed in ringgit and sen.”.

Any obligation, liability, penalty or punishment imposed, made, accrued or incurred under the principal Act on the date of coming into operation of this Act shall, after the date of coming into operation of this Act, continue to be in force and have effect as if the principal Act has not been amended by this Act.

For the purposes of section 14 of the principal Act, where a hirer and owner has entered into a hire-purchase agreement prior to and which continues to exist after the date of coming into operation of this Act, such hirer and the owner may mutually agree to elect the method of calculating the net balance due under the hire-purchase agreement in accordance with the principal Act as amended by this Act.