Work out your monthly instalment, total interest and what that “low” flat rate really costs — under both the old flat-rate system and the reducing-balance method new agreements use from June 2026.
Official source, coverage and how this is calculated: see our data methodology →
How Malaysian car loans were quoted before 1 June 2026 — and banks can still offer this method until 31 March 2027.
The rate shown is illustrative, not a quote — enter the rate your bank offers you. Down payment defaults to 10%, the Hire-Purchase Act minimum deposit.
That 3% flat works out to an annual percentage rate of about 5.57%(the Hire-Purchase Act's own Seventh Schedule formula) — roughly what a reducing-balance loan would have to charge to cost the same. A “low” flat rate is nearly double when quoted the way home loans are.
Flat rate(agreements before 1 June 2026, still offered during the transition to 31 March 2027): total interest — the Hire-Purchase Act calls it “terms charges” — is the amount financed × flat rate × years. Your monthly instalment is the amount financed plus that interest, divided by the number of months. Interest does not shrink as you repay.
Reducing balance (new agreements from 1 June 2026, under the Hire-Purchase (Amendment) Act 2026): interest is charged each month on what you still owe, at the Effective Interest Rate (EIR) your bank quotes — the same standard amortisation a home loan uses.
The flat-to-APR conversion shown under your result uses the Seventh Schedule formula in the Hire-Purchase Act 1967 — the same annual percentage rate every hire-purchase agreement must disclose.
Figures marked pending review are being fact-checked against the primary source by our editor before final publication. Always confirm the current rule with the official source before acting on it.
The loan often earns the dealer more than the car — know your numbers first.
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Under the flat-rate method, total interest is the amount financed × flat rate × tenure in years, and the monthly instalment is (amount financed + total interest) ÷ number of months. Under the reducing-balance method used for new agreements from 1 June 2026, interest accrues on the outstanding balance each month, like a home loan.
The Hire-Purchase (Amendment) Act 2026 came into force. New hire-purchase agreements are charged on the reducing balance with a disclosed Effective Interest Rate (EIR), replacing the flat rate and the Rule of 78. Banks may still offer the old flat-rate method for new loans during a transition period ending 31 March 2027, and agreements signed before 1 June 2026 keep their original terms.
Because the flat 3% is charged on the original amount for the whole tenure, while a home loan's 3% is charged only on what you still owe. A flat rate converts to roughly 1.8–1.9 times the equivalent reducing-balance rate — the calculator shows the conversion using the Hire-Purchase Act's own formula.
Nine years. Bank Negara Malaysia's responsible financing measures cap vehicle financing at a maximum tenure of nine years for applications received from 18 November 2011.
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