14 banks begin offering reducing balance method for hire purchase
BATU KAWAN: Fourteen of the 20 banking institutions providing hire-purchase financing had begun offering customers the reducing balance method as of Sept 18, said Domestic Trade and Cost of Living Minister Datuk Armizan Mohd Ali.
Fourteen out of 20 banks offering hire-purchase financing have begun using the reducing balance method since September 18, according to Domestic Trade and Cost of Living Minister Datuk Armizan Mohd Ali. The remaining six banks are projected to wrap up the switch to the new method by the end of December at the latest, following discussions with the banks.
There are a total of 429 entities, including banks and hire-purchase providers, registered with the Association of Hire Purchase Companies Malaysia, Armizan informed reporters at the closing event of the Consumer Festival (CONFEST) 2026 held at Batu Kawan Stadium. The ministry aims to have 80% of hire-purchase providers offer financing in line with the Hire-Purchase (Amendment) Act 2026 by the end of the year.
Providers not yet fully ready have been given until March 31, 2027, for full compliance, with the Act's amendments taking effect from June 1. The reducing balance method, which calculates interest based on the current loan balance, has been introduced to make early loan settlement more transparent for consumers.
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