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Hire
Purchase was was first used in the 19th Century as a means of
enabling carriers to purchase wagons for use in their
business. Basically, it means exactly what its name suggests;
a hiring of the goods until a certain condition is met, when
they become the property of the hirer. This condition is
usually the completion of all of the payments. The advantage
to the finance company is obvious, the property in the goods
remains theirs until the goods are paid for. Therefore the
finance company has, at least a partial security for their
debt. In the 1950s and 1960s it acquired a bad reputation.
This was due to the way that some finance companies were
dealing with their customers. This lead to the first Hire
Purchase Acts.
These
principals have remained intact up to the present day. 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.
The result of all this is that the system is now much faster,
slicker, and easier to use. Under the present system, anyone
running a finance company, would do well to consider
undertaking their own legal work.
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