January 23, 2026
Local
Local
KUALA LUMPUR, Jan 23 — Two foreign nationals have become the first individuals in Malaysia to be charged in court for littering under the newly enforced anti-littering law, according to a report by The Star.
KUALA LUMPUR, March 18 — Key amendments to hire-purchase financing under the Hire-Purchase (Amendment) Act 2026 (HPAA) are set to strengthen borrower protection, particularly for those wishing to sell their vehicles before their financing contracts end, according to an economist.
Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the changes benefit borrowers who plan to trade in or sell their vehicles early, as the reducing balance method provides greater savings compared with the Rule of 78, which front-loads interest at the start of the loan tenure.
He added that the amendments could improve affordability for purchasers.
“Overall, these changes should benefit the banking sector by promoting fairness for customers. Will it affect banks’ profits? The impact is minimal. On balance, it is positive for the industry,” he told Bernama.
CIMB Securities Sdn Bhd echoed this view, noting that the impact on banks and non-bank financial companies (NBFCs) is expected to be negligible. Most financial institutions already report that early settlement customers make up only a small portion of their hire-purchase portfolio.
Some FIs already provide financing based on the reducing-balance method, reducing the incentive for borrowers to switch packages. As early settlements often occur mid-term or near maturity, the amount of unearned interest eligible for “goodwill discount adjustments” is limited and unlikely to be significant for both borrowers and financial institutions.
Meanwhile, the Malaysian Automotive Association (MAA) highlighted the importance of improving public awareness and ensuring consistent understanding of how interest rates and instalments are calculated under the reducing-balance method.
“Without clear communication, there is a risk of inconsistent interpretations, which could erode consumer confidence and affect vehicle sales,” MAA said in a statement to Bernama.
MAA also pointed out that while monthly instalments under the new system may appear similar to the flat-rate system, the effective interest rate could be higher. It urged the banking sector to conduct targeted sessions to equip industry frontliners with a clear understanding of the reducing-balance method, including effective interest calculations and instalment structures.
“While frontliners are generally familiar with fixed-rate financing, this may not yet apply to the reducing-balance approach,” it added.
On March 15, Domestic Trade and Cost of Living Minister Datuk Armizan Mohd Ali confirmed that the HPAA will come into effect on June 1, 2026, with a transition period until March 31, 2027, allowing banks time to upgrade systems, processes, and infrastructure.
Bank Negara Malaysia (BNM) explained that under the HPAA, both fixed-rate and variable-rate loans will adopt the reducing-balance method, where interest is calculated on the outstanding principal. Once the balance is fully paid, no additional interest accrues, eliminating the need for waivers or rebates. — Bernama
