‘With greater transparency under the new framework, dealers are spending more time explaining the total financing cost, loan tenure, early settlement benefits and differences between bank packages’
PETALING JAYA: A month after Malaysia overhauled its hire-purchase financing rules, used car buyers remain focused on loan speed and affordability – with little interest in understanding the policy change itself.
Dealers told theSun that the HirePurchase (Amendment) Act 2026 had yet to produce any visible shift in sales or customer behaviour, although some reported slower loan processing and more questions about financing terms.
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Pit Stop Autoworks owner Santhana Vijay, 51, said buyers at his dealership were still overwhelmingly preoccupied with getting their loans approved quickly and some were now waiting longer than before.
“I don’t know whether it is because of this new rule or some other procedures but loan processing is taking three times longer than usual.
“People who have good documents are taking longer to get approval, or they are being required to provide a guarantor.”
Vijay said customers showed no interest in the reducing-balance method or early settlement benefits introduced under the new framework.
“What everyone asks is how fast the loan can be approved, why the loan procedure is taking longer, how much maximum loan they can get, the lowest interest rate and the best repayment duration so that the monthly instalment is low (affordable).”
He added that dealers typically submit applications to several banks per customer and allow them to select the best offer. CarStation dealer Stanley Tan, 42, said sales volumes had held steady but buyers who relied heavily on financing had become more cautious, prompting more detailed conversations at the point of sale.
“There are more questions about financing details. Customers are more interested in understanding monthly installments, total repayment amount, early settlement calculations and differences between banks. Some customers have also started asking about reducing-balance interest, although many still focus primarily on monthly affordability.”
Tan said the new framework was pushing dealers to spend more time explaining total financing costs – a shift he welcomed.
“With greater transparency under the new framework, dealers are spending more time explaining the total financing cost, loan tenure, early settlement benefits and differences between bank packages.
This helps customers make more informed decisions rather than looking only at the monthly payment amount.”
The amendment moves hirepurchase financing away from the flatrate and Rule of 78 system towards a reducing-balance method, under which interest is calculated on the remaining loan balance – a change Domestic Trade and Cost of Living Minister Datuk Armizan Mohd Ali said on May 31 was aimed at strengthening consumer protection and ensuring fairer financing terms.
Federation of Motor and Credit Companies Associations of Malaysia president Datuk Tony Khor Chong Boon cautioned against drawing early conclusions, saying the framework had been in place for too short a period to assess its full impact.
“Overall, the used-car market has remained relatively stable, with no significant change in buyer enquiries or sales compared with the same period last year.
“Most financing applications are continuing as usual and the transition has generally been smooth. While some consumers initially needed time to understand the new financing structure, it has not had a noticeable impact on purchasing decisions so far.”
Tony said the new rules were gradually raising awareness of financing literacy but stressed that affordability remained the dominant factor in purchase decisions. “Household income, cost of living, financing eligibility and the overall economic environment continue to play a much bigger role in consumers’ buying decisions.”
