Kuala lumpur: Malaysia’s banks have announced the introduction of goodwill discounts for early settlement of existing fixed-rate hire-purchase agreements following the Dewan Negara’s approval of the Hire-Purchase (Amendment) Bill. The initiative, as stated in a joint announcement by the Association of Banks in Malaysia (ABM), the Association of Islamic Banking and Financial Institutions Malaysia (AIBIM), and the Association of Development Finance Institutions of Malaysia (ADFIM), is aimed at supporting customers ahead of the implementation of the Hire-Purchase (Amendment) Act (HPAA).
According to BERNAMA News Agency, the associations confirmed that these goodwill discounts would be applicable at the point of early settlement for current fixed-rate hire-purchase contracts, including those calculated using the Rule of 78 method. The HPAA will abolish the flat rate and the Rule of 78 method for new customers, signifying a significant change in how hire-purchase financing will be computed.
The banking sector has committed to offering these goodwill discounts as a gesture of fairness to customers who entered into agreements before the HPAA or during the grace period. This move is to ensure that existing customers receive treatment comparable to new customers under the revised system.
The goodwill discount program is set to begin from the HPAA’s effective date, anticipated in the first quarter of 2026. The banking industry has pledged to inform the public once the HPAA is operational.
The associations have also lauded efforts by the Ministry of Domestic Trade and Cost of Living (KPDN) and Bank Negara Malaysia (BNM) for their roles in spearheading reforms to improve fairness and transparency in hire-purchase financing. They emphasized that the leadership and cooperative efforts have established a more equitable framework for consumers and reinforced trust in the financial system.
Customers who maintain payments according to their agreed schedule until the end of the tenure will remain unaffected by the Rule of 78 method. They are advised to continue with their current payment plans and are not required to take any further action. Once the HPAA is in force, customers are encouraged to visit their banks’ official websites or branches for more information, contact their banks for guidance on eligibility and application procedures for the goodwill discount, and stay updated through announcements from industry associations.