Car dealers, buyers want rollout of new hire purchase Bill to come with clear guidance from authorities and details made public
PETALING JAYA: Potential vehicle buyers have welcomed the new Hire Purchase (Amendment) Bill 2025, but said its rollout must come with clear guidance from the Domestic Trade and Cost of Living Ministry and Bank Negara Malaysia.
As Malaysia prepares to adopt the reducing balance interest system for car loans, vehicle dealers and buyers said details must be made public.
Puchong-based car dealer Muhammad Hidzeir Haizar, 28, said the new system would change how customers judge long-tenure loans and may reshape buying patterns.
“With a nine-year loan, the interest goes down as the balance gets smaller, and customers will feel the arrangement is fair between them and the bank.
“People always think a nine-year loan puts them at a loss. But with this structure, they can decide based on their actual financial situation,” Muhammad Hidzeir told theSun.
He said the shift would require dealers to adjust both their pricing and sales strategy to keep older stock moving while preparing for faster turnover cycles among customers.
“For higher cost used car units bought under the old structure, we may need to promote them more aggressively through trade-in rebates or limited-time settlement rebates so inventory does not slow down.
“A customer who buys this year may be able to sell earlier and upgrade faster, which means the repeat purchase cycle becomes quicker and dealers must strategise pricing carefully.
“Clearer direction from regulators is essential before dealers can fully adapt to the new calculation method and plan their stock movements.
“There cannot be confusion during the transition. Used car financing rarely gets meaningful support, so incentives for older stock would help prevent our sales from being negatively affected,” he said.
Meanwhile, prospective buyers told theSun about how the revised system could influence their loan choices.
Businessman Muhammad Rizqan, 25, from Johor said the reducing balance method feels more transparent for first time borrowers.
“This method is easier to understand and doesn’t feel as burdensome. I’m more confident taking a long-term loan now. But on paper, the burden looks lighter and some people may get carried away with the idea of lower interest and take on too many commitments.
“The government’s decision is good, but banks must give clearer explanations, especially on the technical parts to avoid confusion among buyers,” he said.
Marketing executive Muhammad Aizat Zainol, 26, from Kuala Lumpur, who is considering moving from a motorcycle to a car, said the amendment makes financing appear more manageable.
“I never really understood car loan structures, but this new law sounds more appealing. Early settlement options help me plan better and choose a car within the right price range,” he said.
Private-sector employee Safwan Adlan, 25, from Petaling Jaya said the system gives him clearer expectations about long-term repayment.
“In the long run, it’s better because I can expect reductions after two or three years. The first payments may be tougher if banks adjust rates. But overall, it’s an improvement.
“I still prefer to finish my loan fully, but if early settlement becomes cheaper, it’s a good option to have.”
The Hire Purchase (Amendment) Bill 2025 abolishes the flat-rate and Rule 78 formula and replaces it with the reducing balance method, in which interest is charged only on the outstanding loan amount instead of being front-loaded in the early years of a contract.
The Bill was approved by Parliament on Oct 8 and is expected to take effect within 18 months of gazettement, giving banks time to reconfigure systems and adjust product structures before issuing new hire-purchase agreements.
