Work out your monthly repayment for any loan — and see why the same percentage costs nearly double when it's quoted “flat”, the way Malaysian personal loans are.
Official source, coverage and how this is calculated: see our data methodology →
Interest charged on what you still owe each month — how home loans and most bank financing work.
The rate shown is illustrative, not a quote — enter the rate your bank offers you.
Reducing balance uses the standard amortisation formula: your monthly repayment M = P × r(1+r)ⁿ ÷ ((1+r)ⁿ − 1), where P is the loan, r the monthly rate and n the months. Early payments are mostly interest; the split flips as the balance falls — open the year-by-year breakdown to watch it happen.
Flat rate charges interest on the original amount for the whole tenure: total interest = loan × rate × years, split evenly across the months. The flat-to-APR conversion shown with your result uses the Hire-Purchase Act's Seventh Schedule formula — the way the Act turned a flat quote into a comparable annual percentage rate for agreements made before 1 June 2026, when the Schedule was deleted in favour of the effective interest rate.
Compare on the effective rate, check your DSR headroom, then borrow.
A flat rate charges interest on the original loan amount for the entire tenure. A reducing-balance rate charges interest only on what you still owe, so the interest portion shrinks every month. The same percentage costs far more as a flat rate — a 5% flat loan costs about the same as a 9%+ reducing-balance loan.
Malaysian personal loans are usually quoted flat. Home loans are always reducing balance. Car loans signed before 1 June 2026 are flat; new hire-purchase agreements from that date move to reducing balance with an effective interest rate under the Hire-Purchase (Amendment) Act 2026, although lenders have until 31 March 2027 to switch their systems, so some still quote flat for now. Your product disclosure sheet states the method — look for 'per annum flat' or 'reducing balance'.
Convert the flat rate to its equivalent annual percentage rate — the calculator does this using the annual percentage rate formula in the Hire-Purchase Act's Seventh Schedule. Compare that number against the reducing-balance rate. Never compare a flat rate directly with a reducing-balance rate.
Flat: (loan amount + loan amount × flat rate × years) ÷ months. Reducing balance: the standard amortisation formula M = P × r(1+r)ⁿ ÷ ((1+r)ⁿ − 1), where r is the monthly rate and n the number of months — the same maths every Malaysian bank uses for home loans.
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