The change applies only to agreements signed on or after that date and only at banks that are already operationally ready to offer it.
PETALING JAYA: Borrowers with existing hire-purchase loans will not automatically benefit from a new interest calculation law that took effect this month and those hoping to settle early may still face less favourable terms depending on which bank they are with.
The Hire-Purchase (Amendment) Act 2026, which came into force on June 1, introduced a reducing-balance interest framework intended to make early loan settlements fairer.
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But the change applies only to agreements signed on or after that date and only at banks that are already operationally ready to offer it. For everyone else, the old rules remain.
“For clarity, all existing hirepurchase agreements entered into before June 1, 2026, will remain status quo under the old hirepurchase framework (Rule of 78),“ Association of Banks in Malaysia (ABM) executive director Dr Amina Josetta Kayani told theSun.
Under the Rule of 78, a disproportionately large share of interest is front-loaded into the early years of a loan – meaning borrowers who settle ahead of schedule save less than they might expect.
Those customers will, however, receive a goodwill discount if they opt for early settlement during the transition period. New borrowers face a different uncertainty: whether the financing they are being offered falls under the old or new framework depends on which bank they approach and when.
A transition window running until March 31, 2027, means the industry will operate under two parallel systems simultaneously.
“As with any major industry wide change, implementation timelines may vary across institutions depending on operational readiness,“ Amina said.
Of the major lenders, only MBSB Bank is listed in the June 2026 rollout for fixed-rate hirepurchase financing under the new reducing-balance method. Bank Rakyat follows in August.
AmBank, CIMB Bank, Hong Leong Bank, Maybank and Public Bank – along with their Islamic banking arms – are expected to adopt the framework in September.
Affin Bank, Affin Islamic Bank, Bank Muamalat, RHB Bank and RHB Islamic Bank are scheduled for December, while Bank Islam and Bank Simpanan Nasional are expected to follow in January 2027.
Agrobank is slated for April 2027. For floating-rate hire-purchase financing, several banks have already moved to the reducingbalance method, including Affin Islamic Bank, AmBank, AmBank Islamic Bank, Bank Muamalat’s retail segment, Bank Simpanan Nasional, Hong Leong Bank, MBSB Bank, RHB Bank and RHB Islamic Bank.
ABM has published the full rollout schedule on its website. Customers are advised to check with their banks at the enquiry or application stage to confirm which framework applies to their financing.
