Hire Purchase
Short write-up
The main legislation governing the hire purchase transactions in Malaysia is the Hire Purchase Act 1967, which came into force on 11 April 1968 after hire purchase became an increasingly popular method of acquisition.
Only the following goods can be bought on hire purchase in Malaysia :
all consumer goods
motor vehicles namely
invalid carriages
motor cycles
motor cars including taxi cabs and hire cars
goods vehicles where the maximum permissible laden weight does not exceed 2,540 kilograms
buses, including stage buses
The most common type of hire purchase agreement in Malaysia is for the purchase of motor vehicle
A hire purchase agreement must be signed by or on behalf of all parties to the agreement.
However, the finance company, dealer, agent or person acting on behalf of the finance company must not request an intending hirer or agent to sign a hire purchase agreement or other form or document relating to the hire purchase agreement unless such document is duly completed or filled in.
This means, don't sign blank agreement forms or documents.
A hire purchase agreement that does not comply with the above shall be void.
Under the Hire Purchase Act 1967, a hire purchase agreement must :
specify a date on which the hiring shall be deemed to have commenced
specify the number of installments to be paid under the agreement by the hirer
specify the amount of each of installments and the person whom and the place at which the payments of these installments are to be made
specify the time for the payment of each of those installments
contain a description of the goods sufficient to identity them
specify the address where the goods under the hire purchase agreement are
Among others, the hire purchase agreement must also set out in tabular form
cash price - the price at which at the time of signing the agreement the hirer might have purchased the goods for cash
deposit - the amount paid by deposit
freight or delivery charges if any - the amount included in the total amount payable to cover the expense of delivering the goods to the hirer
vehicle registration fees - any amount included in the total amount payable to cover vehicle registration fees in respect of the goods
insurance - any amount included in the total amount, payable for insurance in respect of the goods
the total amounts referred to in the (i), (iii), (iv) and (v), less (ii)
terms charges or interests - the amount of any other charges included in the total amount payable
the annual percentage rate for terms charges which shall be calculated in accordance with the formula set out in the Seventh Schedule of the Hire Purchase Agreement
the total of the amounts referred to in (vi) and (vii), described as "the balance originally payable under the agreement and
the total amount payable.
Where a hire purchase agreement does not comply with the above, it shall be void.
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