New Hire Purchase Act
Effective from 15-06-2011, the new hire purchase act has been in force. With the enforcement of the new hire purchase act, the financial institutions no longer offer 100% margin of finance for new cars. Meaning to say, every customer wishing to buy new cars are required to come up with at least 10% downpayment,however, the more downpayment the better.
Looking at the act, the aim of the authorities, especially KPDNKK, is to give better advantages to customers & provide better security to the financial institutions in the sense that the financial institutions will be more confident in approving loans. This would be a 2 side advantage as it would also lessen the interest on the part of the customers due to low amount of financing.
However, on the side of the car dealer, it brought some side effects, that is the decrease of sales as evident during the last month’s nationwide drop in sales figure. We are hoping this trend would not continue further as it would affect the whole automotive system. The reason for the drop of sales is mainly due to the introduction of the new hire purchase act.