Licensing Requirement for Hire-Purchase Business / Transaction in Malaysia

A:  A hire-purchase transaction is a contractual arrangement where the owner of goods agrees to let the hirer use the goods for a specific period, with the option to purchase the goods at the end of the hire term.

Typically, the hirer pays an initial deposit followed by monthly instalments. Throughout the hire period, ownership of the goods remains with the owner. Only when the hirer completes all payments does the ownership officially trans transfers to the hirer.

In simple terms, it’s like “rent now, buy later”, where you use the goods while paying over time, and you become the owner after completing all payments. This is commonly used for goods like cars, motorcycles, or household appliances.

This is well explained in the case of Low Ping Ming v MBF Finance Bhd [2000] 2 CLJ 307, where the Court emphasized that a hire-purchase agreement is a contract of hire with an option to purchase and that title to the goods remains with the owner until the hirer exercises the option to purchase.