Hire Purchase Financing Glossary

Amount Financed

Total facility granted to hirer calculated as follows: Cash Price - Deposit + Freight (if any) + Vehicle registration fee (if any) + Insurance premium (for 1 year).

Annual Percentage Rate

The annual percentage rate is calculated in accordance with the following formula:

2NF (300C + NF)
2N2F + 300C (N + 1)

Where:

N is the total number of instalments.

C is the number of instalments that, under the contract, will be paid in one year or, where the contract is to be completed in less than one year, the number of instalments that would be paid in one year if instalments continued to be paid at the same intervals.

F is the amount determined in accordance with the formula

100C x T
N x A

Where:

C is the same number as the first-mentioned formula.
T is the total amount of the pre-determined terms charges.
N is the total number of instalments.
A is the amount financed.

Authority Card

An identification card to be shown to the hirer by the repossessor before repossession. The card has the following details:

• The name and address of the repossessor and banking institution
• Nature of appointment of the repossessor
• The signature of an authorised representative of the banking institution

Comprehensive Insurance

Motor insurance policy which provides protection:

• Against legal liability for death or bodily injury and property loss or damage to the third party
• Against loss or damage to the motor vehicle arising from accident, fire, theft and other loss or damage as stated in the insurance policy

Deposit

Initial cash payment required to be paid before entering into the hire purchase agreement.

Early Settlement

Settle in full the balance due under the hire purchase agreement earlier than the date originally agreed upon.

Fixed Rate Loan

A term used to describe a loan, where interest charged is fixed throughout the tenure of the loan.

Fixed Term Charges

Total interest charged on the HP facility that is calculated as a fixed percentage on the amount financed over the duration of the facility.

Hirer

A person who hires the motor vehicle under the hire purchase agreement.

Instalment

Monthly payment that the hirer has to pay to the banking institution as stated in the hire purchase agreement.

Passenger Vehicles

Vehicles for private use, for example Multi Purpose Vehicles, Sports Utility Vehicles and saloon cars:

1. A new passenger vehicle - A newly manufactured passenger vehicle, yet to be registered with JPJ.
2. Used passenger vehicles - A passenger vehicle previously registered with JPJ.
3. Reconditioned passenger vehicle - An imported used passenger vehicle yet to be registered with JPJ.
4. Used reconditioned passenger vehicle - An imported used passenger vehicle which have been registered with JPJ previously.

Rebate

Partial refund of the term charges (interest) calculated according to a formula stipulated in the Hire-Purchase Act 1967, if the hirer made an early settlement.

Repossess

When the owner of the motor vehicle (i.e. banking institution) takes back possession of the motor vehicle from the hirer.

Repossessor

A person authorised by the owner (i.e. banking institution) to repossess motor vehicles from defaulted hirers on behalf of the banking institution. The repossessor has to be registered with the Association of Hire Purchase Companies Malaysia.

Service of Notices

Any notice or document required to be sent or given to a hirer may be sent or given in the following manner:

• By personal delivery; or
• By registered mail addressed to the hirer at the last known address

Term Charges

Total interest charged on the hire-purchase facility and is calculated based on a flat rate on the amount financed over the duration of the facility.

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