Dear Valued Customers,

Under the Hire Purchase Amendment Act 2025 (HPAA), the flat rate and the Rule of 78 method will be abolished for new customers, marking a major shift in how hire-purchase financing is calculated. To ensure fairness for customers who entered into agreements prior to the HPAA or during the permitted grace period, KFH Malaysia will offer goodwill discount at the point of early settlement of these fixed-rate KFH Automobile Ijarah-i financing facilities that applies the Rule of 78 method (“Goodwill Discount”).

Please find the key information as follows:

Who qualifies?

Individuals and micro or small businesses (SME) with a KFH Automobile Ijarah-i financing facility which applies the Rule of 78 method:

1. entered into before the HPAA takes effect; or

2. entered into during the 18-month grace period allowed under the HPAA; and

3. who choose to settle their hire-purchase financing early i.e. any time before the financing maturity

Eligibility Criteria: At the point of early settlement, accounts should:

1. not be in arrears exceeding 90 days;

2. not be under legal action or issued with repossession order; or

3. not be under an existing restructuring and rescheduling (R&R) or enrolled in a formal debt management programme

How is the Goodwill Discount calculated?

The Goodwill Discount will be calculated based on the features of the existing hire-purchase agreement (such as timing of early settlement and rate structure) and applied to the net balance due. The intention is to offer early settlement treatment that is broadly comparable to the approach under the HPAA. The exact calculation and amount of Goodwill Discount may be varied by bank and by product.

Effective date: The goodwill discount programme will commence starting from the effective date of the Hire-Purchase Amendment Act (“HPAA”), which is 1 June 2026.

Duration: The programme will remain available until all fixed rate KFH Automobile Ijarah-i financing facilities under the Rule of 78 method have reached maturity or settled early (estimated 9 years, in line with the maximum vehicle financing tenure).

Customers who wish to continue making payments according to their agreed schedule until the end of the tenure will not be affected by the Rule of 78 method. As such, customers may continue to pay the same instalments as originally agreed and do not need to take any action.

To read more, please refer to:

1. FAQ on Goodwill Discount

2. Association of Islamic Banking and Financial Institutions Malaysia (AIBIM)’s Press Release

DISCLAIMER

If you click the link above (AIBIM), you are about to enter a third party website and KFH Malaysia's privacy policy will cease to apply. Thus, you are advised to read the privacy policies of the linked website.

As such, KFH Malaysia shall not be responsible or liable for any loss or damage suffered or incurred whether directly or indirectly for any content of or any transactions entered via the website you are about to access.