Introduction

This document set out Corporate Hire Purchase (CHP) product features for processing Hire Purchase (Act) and Hire Purchase (Non-Act). It also covers acquisition of goods under Islamic concept financing based on Shariah concept of Al-Ijarah Thumma Al-Bai (AITAB).

Main Product Features

1. Hire Purchase is hiring of goods with the option to purchase the goods at the end of hire purchase term. A hirer means a person who takes or has taken the goods from an owner. An owner (bank or financial intermediary) means a person who lets or has let the goods to the hirer under hire purchase agreement or in short, the person financing the goods. Ownership of the goods being financed will be passed to the hirer after all installments are fully paid.
2. Under such an agreement, financing of goods specified in the First Schedule of the Hire Purchase Act 1967 [Amendment 2010] (“the Act”) is referred as Hire Purchase (Act) and is governed by the Act that enumerates the rights, duties and liabilities of the hirer and owner.
3. Goods specified in the First Schedule of the Act includes all consumer goods purchased, motor vehicles, goods vehicles with permissible laden weight not exceeding 2,540 kg, and buses including stage buses.
4. Financing of goods outside the ambit of the First Schedule of the Act with option to purchase is referred as Hire Purchase (Non-Act). The goods could be new, used, reconditioned or rebuilt.
5. The interest/profit charged is based on flat rate computation or pegged against Base Rate or Cost of Funds (COF) or any other rates as determined by the regulatory authority.
6. In the event of hirer failing to perform its obligation to service the hire rental or performs otherwise from the terms and conditions stated in the agreement, the Bank has the right to exercise reasonable actions to mitigate its losses.
7. The brief terms and conditions of the products are summarized as follow: