COMMENT | While many were distracted by headlines and politics, a major change took effect on June 1. It changes how Malaysians pay for their cars.

For decades, vehicle loans operated under a system few understood, but almost everyone felt. Many borrowers faced the same issue. After years of repayment, the outstanding balance remained high. Early settlement offered little benefit.

It comes down to how interest was calculated.

The previous system relied on flat rate calculations and the Rule of 78. Interest was front-loaded. Borrowers paid a large portion of interest early, while the principal reduced slowly.

By the time early settlement was considered, most of the interest had already been collected.

That system no longer applies to new contracts.

The Hire-Purchase (Amendment) Act 2026 introduces...