The Hire-Purchase (Terms Charges) Regulations 2026 (“2026 HP Regulations”) was gazetted on 15 April 2026 and will come into force on 1 June 2026, together with the Hire-Purchase (Amendment) Act 2026 (“HP Amendment Act”), revoking the Hire-Purchase (Terms Charges) Regulations 2005 (“2005 HP Regulations”).
 
Revised maximum limit of term charges
 
Following the introduction of the term “effective interest rate” (“EIR”) under the HP Amendment Act, the 2026 HP Regulations introduce an updated maximum limit for fixed and variable rate term charges for hire-purchase agreements concerning goods specified in the First Schedule of the Hire-Purchase Act 1967, which include among others, motor vehicles.
 
The new limits, when term charges are calculated as an EIR, are as follows: 

In comparison with the 2005 HP Regulations, the 2026 HP Regulations introduce an increase in the cap for fixed rate financing, from the previous 10% p.a., while the cap for variable rate financing remains unchanged.
 
The departure from the old flat rate to the new EIR also means that hire-purchase providers now calculate interest based on the outstanding loan balance at any given time, instead of the principal amount throughout the entire financing period.
 
Our article on the amendments to be introduced under the Amendment Act (while it was in the form of a Parliamentary Bill) can be accessed here.
 
 
Alert by Alyshea Low (Partner) of the Hire Purchase and Leasing Sub-Practice of Skrine.¹
 
 

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