14 banks start offering ‘reducing balance’ method for HP loans

The six remaining banks which have not implemented the 'reducing balance' method for hire-purchase loans have committed to switching to the new method by Dec 31. (File pic)

SEBERANG PERAI: Fourteen out of the 20 banks in the country have begun offering a reducing balance method for customers with hire purchase loans, in compliance with amendments made to the Hire-Purchase Act.

Domestic trade and cost of living minister Armizan Mohd Ali said the remaining six banks have committed to finalising their transition from the old flat-rate and the Rule of 78 calculation methods to the reducing balance method by Dec 31.

Armizan also said 80% of the 429 hire-purchase providers registered under the Association of Hire Purchase Companies Malaysia are transitioning to both the reducing balance method and the effective interest rate.