KUALA LUMPUR, March 16 -- Banks in Malaysia will offer "goodwill discounts" to customers who choose to settle their existing hire-purchase loans early, starting from June 1.

The industry-wide initiative aims to ease the transition as major reforms to car financing rules, which abolish the controversial "Rule of 78" and flat rate calculation methods, are set to take effect.

In a joint statement, banking associations confirmed that the Hire-Purchase (Amendment) Act 2026 will be implemented on June 1, ushering in a more transparent financing system for consumers.

Under the new rules, the "Rule of 78" and flat interest rate structures for hire-purchase agreements will be abolished.

All new financing will shift to a reducing balance method...