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Hire Purchase is a system of acquiring goods on credit whereby the seller of the goods is regarded as the dealer, the purchaser is regarded as the hirer and the finance company as the owner.
The ownership of the goods bought on hire purchase does not pass to the hirer at the time of the hire purchase agreement or upon delivery of the goods.
The ownership of the goods remains in the finance company until the hirer has fully settle the price agreed upon in the hire purchase agreement.
A hire purchase agreement, commonly known as H.P. agreement, in respect of the goods must be in writing and printed in type of a size not smaller than the type known as 10-point Times. Any oral agreement is not a valid hire purchase agreement.
The main legislation governing the hire purchase transactions in Malaysia is the Hire Purchase Act 1967, which came into force on 11 April 1968 after hire purchase became an increasingly popular method of acquisition.
Only the following goods can be bought on hire purchase in Malaysia :
The most common type of hire purchase agreement in Malaysia is for the purchase of motor vehicle.
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