Car lease vs hire purchase in Malaysia: what is the difference?

These words are often mixed up in advertising, so it helps to know what each one normally means.

• Hire purchase (sewa beli): you pay a down payment, then monthly instalments for the whole price. Ownership normally passes to you after the last instalment.
• Lease with a balloon (pajakan): you pay a down payment and lower monthly payments, with a balloon amount due at the end of the term. This is the model behind the estimates on SSW Car Mobility.
• Car subscription: usually one monthly fee that may also cover services such as maintenance or insurance, for a flexible or fixed period. Terms differ a lot between providers.
• Rental (sewa): paying to use a car for a day, a week or longer, then returning it.

Providers use these words differently, so the agreement matters more than the label.

A lower monthly payment is not the same as a lower cost. With a flat rate, interest is charged on the whole amount financed, balloon included, and if you keep the car the balloon is still money you pay.

• The total paid during the term.
• The balloon, and how you plan to meet it.
• The interest and any fees, and how early settlement works.
• Who insures, taxes and maintains the car, and what condition it must be in if you return it.

See a worked example in our guide to how car leasing works, or try your own numbers with the lease calculator.

• Who owns the car during the term, and after it?
• What is the total I pay, including any balloon?
• What happens if I want to end early?
• What is included, and what is not?
• Is the estimate in writing, and what can change before I sign?