/akn/my/act/amendment_act/2026/A1783
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HIRE-PURCHASE (AMENDMENT) ACT 2026 is Malaysia Amendment Act, cited as Amendment Act A1783 2026, currently marked in force and first recorded in 2026.
Opening note
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.
Amendment of section 2
The Hire-Purchase Act 1967 [Act 212], which is referred to as the “principal Act” in this Act, is amended in subsection 2(1)—
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
Subsection 4(2) of the principal Act is amended—
by deleting the words “under his hand”.
Hire-Purchase (Amendment)
5
Amendment of section 4b
Section 4b of the principal Act is amended by inserting after subsection (1) the following subsection:
“(1a) For the purposes of subsection (1)—
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
Section 4c of the principal Act is amended—
by substituting for subparagraph (1)(c)(viii) the following subparagraph:
“(viii) the effective interest rate for terms charges;”;
and
by substituting for the words “base lending rate”
the words “reference rate”; and
by substituting for paragraph (c) the following paragraph:
“(c) the effective interest rate for terms charges; and”.
Amendment of section 4e
Section 4e of the principal Act is amended by substituting for subsection (3) the following subsection:
“(3) For the purposes of subsection (1), registration certificate refers to the registration certificate issued under the Road Transport Act 1987 [Act 333].”.
Amendment of section 5
Section 5 of the principal Act is amended by inserting after subsection (1a) as deleted the following subsections:
“(1b) Where an owner intends to serve or cause to be served an electronic copy of the hire-purchase agreement under subsection (1) or an electronic copy of the hire-purchase agreement following a variation, the owner shall ensure that the hire-purchase agreement explicitly recognizes the use of electronic form and the service of such agreement by electronic means as effective service.
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.”.
Amendment of section 6a
Subsection 6a(2) of the principal Act is amended by substituting for the words “base lending rate” the words “reference rate”.
Amendment of section 6b
in the shoulder note, by substituting for the words
“base lending rate” the words “effective interest rate”;
by substituting for the words “base lending rate”
the words “effective interest rate”; and
by inserting after the words “the continuance of the agreement” the words “based on the prevailing reference rate”;
Hire-Purchase (Amendment)
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
Section 6c of the principal Act is amended—
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
Section 14 of the principal Act is amended—
by inserting after subsection (3) the following subsection:
“(4) For the purposes of this section, “net balance due”
means—
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 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.”.
Amendment of section 15
Subsection 15(6) of the principal Act is amended by substituting for paragraph (a) the following paragraph:
“(a) “balance outstanding under the hire-purchase agreement”
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 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
Section 18 of the principal Act is amended—
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 substituting for paragraph (3)(aa) the following paragraph:
“(aa) the balance outstanding under the hire-purchase agreement is—
the outstanding amount financed; and
terms charges accrued and calculated up to the time of the owner so taking possession of the goods, less any surrender value of a contract of insurance where—
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
Section 43 of the principal Act is amended—
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
Subsection 45(1) of the principal Act is amended—
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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New section 45a
The principal Act is amended by inserting after section 45
the following section:
“Legal recognition of electronic message 45a. Nothing in this Act shall deny the legal effect, validity or enforceability of any notice or document made under this
Act on the ground that it is wholly or partly in an electronic form provided that the requirements under laws which provide for legal recognition and use of electronic messages are complied with.”.
Amendment of section 57a
Section 57a of the principal Act is amended by inserting after subsection (2) the following subsection:
“(3) Notwithstanding subsection (2), for the purpose of calculating the net balance due under section 14, any amendments, variations, deletions or additions to the formula set out in the Sixth Schedule to the Act shall apply to any hire-purchase agreement entered into prior to such amendments, variations, deletions or additions provided that the hirer and owner have mutually agreed to such calculation.”.
Amendment of Second Schedule
The Second Schedule to the principal Act is amended, in Part I—
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”.
Amendment of Fifth Schedule
The Fifth Schedule to the principal Act is amended by substituting for paragraph (b) the following paragraph:
“(b) if within twenty-one days, you give notice of intention to finalise the agreement and pay the balance due under the agreement and costs of the re-possession:
The owner’s estimate of the amount required to finalise the agreement is where in the hire-purchase agreement the terms charges are at a fixed or variable rate:
Total amount payable under the agreement
Less deposit and instalments paid RM…………...
Balance due under agreement
Less surrender value of the contract of insurance
Add arrears of interest due on overdue interests
Add costs of re-possession
Storage, repair or maintenance
Total
”.
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Substitution of Sixth Schedule
The principal Act is amended by substituting for the Sixth Schedule the following schedule:
“Sixth Schedule
[Section 30]
TERMS CHARGES
Where the terms charges are at a fixed or variable rate, the terms charges shall be calculated in accordance with the following formula:
Where
C represents the amount of terms charges expressed in ringgit and fractions of ringgit
R represents the terms charges calculated as an effective interest rate per centum per annum
T represents the number of scheduled payments per annum
N represents the total number of instalments for the hiring period
P represents the difference between the cash price of the goods comprised in the agreement and the amount of the deposit, together with—
insurance, if any, expressed in ringgit and sen.”.
Deletion of Seventh Schedule
The principal Act is amended by deleting the Seventh Schedule.
Saving and transitional
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.