Hire-Purchase

Hire Purchase is a system of acquiring goods on credit whereby the seller of the goods re regarded as the dealer, the purchaser is regarded as the hirer and the finance company as the owner. The ownership of the goods bought on hire purchase does not pass to hirer at the time purchase agreement or upon delivery of the goods. The ownership of the goods remains in the finance company until the hirer has fully settle the price agreed upon in the hire purchase agreement. A hire purchase agreement, commonly known as H.P agreement, in respect of the goods must be in writting and printed in type of a size not smaller than the type known as 10-point Times. Any oral agreeemnet is not a valid hire purchase agreement. The main legislation governing the hire purchases transaction in Malaysia is the hire Purchase Act 1967, which came into force on 11 April 1986 after hire purchase became an increasingly popular method of acquisition. Only the following goods can be bought on hire purchase in Malaysia:

1. all consumer goods

2. motor vehicles namely

- invalid carriages

- motor cycles

- motor cars including taxi cabs and hire cars

- goods vehicles where the maximum permissible laden does not exceed 2540 kilograms

- buses, including stage buses

What are the details that must be stated in a hire purchase agreement?

Under the Hire Purchase Act 1967, a hire purchase agreement must:

i. specify a date on which the hiring shall be deemed to have commenced

ii. specify the number of installments to be paid under the agreement by the hirer

iii. specify the amount of each of installments are the person whom and the place at which the payment of these installment are to be made

iv. specify the time for the payment of each of those installments

v. contain a description of the goods sufficient to identity them

vi. specify the address where the goods under th hire purchase agreement are.