Kuala lumpur: The Hire Purchase (Amendment) Act 2026, aimed at strengthening consumer credit fairness and modernising hire purchase agreements, will come into force on June 1, four months after it was gazetted on January 30, 2026. Domestic Trade and Cost of Living Minister Datuk Armizan Mohd Ali announced that a transition period may be provided for hire purchase providers that need time to adjust their systems, documentation, and processes to meet the new requirements.

According to BERNAMA News Agency, providers ready to comply may begin offering hire purchase agreements under the new amendments once the law takes effect in June. Armizan, speaking at the National Consumer Day 2026 celebration officiated by Prime Minister Datuk Seri Anwar Ibrahim, stated that the amendments will abolish the flat interest rate and the Rule of 78 method. This change addresses the issue where borrowers seeking early loan settlement face a high outstanding balance that does not reflect the actual loan cost.

The amendments also support digital transformation by permitting technology use in hire purchase agreements, including digital signatures and electronic document submission, to enhance agreement process efficiency. Armizan highlighted that these amendments are part of the consumer movement agenda for 2026, focusing on legal reforms related to consumer rights and interests, including implementing and amending relevant legal frameworks.

Since last year, measures introduced include strengthening the legal framework governing the consumer credit ecosystem. This includes enacting the Consumer Credit Act 2025 (Act 873), passed by the Dewan Rakyat on July 21, 2025, and the Dewan Negara on September 4, 2025. Act 873, regulated by the Ministry of Finance, came into force on March 1, 2026. Armizan emphasized that these legal reforms reflect the government's commitment to creating a more transparent and accountable credit ecosystem, improving industry governance, and safeguarding consumer rights and interests nationwide.