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 ratecharges 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 statutory way Malaysia turns a flat quote into a comparable annual percentage rate.
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.
Compare on the effective rate, check your DSR headroom, then borrow.
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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 after that date use reducing balance under the Hire-Purchase (Amendment) Act 2026. 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 Hire-Purchase Act's Seventh Schedule formula. 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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