KUALA LUMPUR – In an effort to support existing hire-purchase customers, banks across Malaysia have introduced a goodwill discount programme.
This initiative is set to commence once the Hire-Purchase (Amendment) Act (HPAA) comes into effect in 2026, offering a more equitable way for customers to settle their loans early.
The announcement, made today 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), follows the passing of the Hire-Purchase (Amendment) Bill in Dewan Negara.
Under this new programme, customers with existing fixed-rate hire-purchase agreements or those that apply the Rule of 78 method will be able to enjoy a goodwill discount when they choose to settle their loans early.
The move comes as part of a broader reform under the HPAA, which will abolish the flat-rate and Rule of 78 methods for new customers, bringing significant changes to how hire-purchase financing is calculated in Malaysia.
To ensure fairness to customers with pre-existing agreements, the banks are offering the goodwill discount to level the playing field with new customers who will benefit from the revised system.
“Individuals and micro or small businesses with hire-purchase agreements made before or during the 18-month grace period following the HPAA’s enactment can benefit. These customers will be eligible for a discount when settling their agreements early,” ABM said in a statement.
“To qualify for the goodwill discount, accounts should not be in arrears for more than 90 days, must not be under legal action or repossession orders, and should not be part of a restructuring or debt management programme,”
“The amount of the goodwill discount will depend on the terms of the individual hire-purchase agreement and will be explained at the time of early settlement. Banks will ensure that the discount brings early settlement conditions in line with the new HPAA framework.”
The initiative aims to treat customers fairly and to align the early settlement terms for existing hire-purchase agreements with the new regulations under the HPAA.
The discount will be applied to the net balance due at the time of early settlement and will vary depending on the specific terms of each hire-purchase agreement, such as the timing of settlement and the rate structure.
Banks will provide a detailed explanation of the discount to affected customers when they apply for early settlement.
The programme is set to begin once the HPAA comes into effect in the first quarter of 2026, with an estimated duration of nine years until all fixed-rate hire-purchase agreements using the Rule of 78 method are either matured or settled early.
Customers who choose not to settle early can continue to make their payments according to the original schedule, with no impact from the changes to the law.
The banking industry has praised the Domestic Trade and Cost of Living (KPDN) Ministry and Bank Negara Malaysia (BNM) for their leadership in driving these reforms, which are expected to enhance fairness and transparency in the hire-purchase sector.
These changes are seen as a positive step towards protecting consumer interests and strengthening trust in the financial system.
For more information, customers are encouraged to visit their bank’s official website or branch after the HPAA takes effect to learn about eligibility, application procedures for the goodwill discount, and any other relevant details. Additionally, ABM, AIBIM, and ADFIM will provide guidance through their official channels. – December 2, 2025