Key Changes under the Hire-Purchase (Amendment) Bill 2025

10 October 2025

1. Revised Interest Rate References 

• Deletion of the term “base lending rate” from sections 2, 4C, 6A(2), 6B, and 6C.
• Deletion of the term “statutory rebate”.
• Introduction of the term“effective interest rate” in section 2(1) to represent the actual financing cost of a hire-purchase for both fixed and variable terms charges.
• Introduction of the term “reference rate” in section 2(1) as ‘the benchmark interest rate that forms the basis for determining the pricing of variable rate financing facilities, whereby the benchmark rate is the published prevailing overnight policy rate’. 

2. Revised Method for Calculation of Terms Charges 

• Paragraph (b) of the Fifth Schedule is amended to reflect the revised cost computation methodology which is applied to repossessed goods where the same calculation is used regardless of whether the terms charges are at a fixed or variable rate.
• The Sixth Schedule is substituted to reflect the calculation of terms charges where the same calculation is used regardless of whether the terms charges are at a fixed or variable rate.
• Deletion of the Seventh Schedule resulting from the replacement of “annual percentage rate” with “effective rate of interest”. 

3. Enhanced Transparency and Consumer Protection 

• Amendment to section 6B requires the owner to notify the hirer 14-days prior to the date the revised effective interest rate comes into effect, as well as the revised amount or number of instalments, as the case may be.
• Failure to provide notice constitutes an offence under the new section 6B(4).
• Definitions and calculations for “net balance due” and “balance outstanding” (sections 14, 15, and 18) are revised to ensure consistent deduction of the surrender value of insurance contracts. 

4. Digitalization and Electronic Execution 

• Amendments to sections 4 and 5 impose obligations on the owner in relation to the service of the hire-purchase agreement through electronic means, subject to written consent from the hirer.
• Amendments to section 43 expand the current mode of service of notices to include service by telegram, facsimile transmission or by any other electronic or other means of transmission which results in the notice or document being transmitted in writing. Currently, the existing modes of service of notices includes personal service and registered post.
• Introduction of a new section 45A which recognizes the legality of a relevant notice or document which is made in electronic form. 

5. Requirement for Due Diligence 

• A new subsection 4B(1A) requires owners (financiers) to undertake the necessary due diligence to verify the identity of the intending hirer and to maintain proper records of the due diligence process for at least seven years from the date of the hire-purchase agreement. 

6. Formatting Requirements 

• Section 45 provides clarity on the formatting requirements for a hire-purchase agreement to be in at least 10-point Times font and in black text, irrespective of the form of the documents. 

7. Transitional and Saving Provisions 

• A new subsection 57A(3) provides flexibility for both hirer and owner who have existing agreements prior to the coming into force of the HP Bill to agree to use the method of calculating the net balance due set out in the amended Sixth  Schedule for their existing hire-purchase agreement.