Loan repayment calculator Malaysia: how it works

A loan repayment calculator turns three inputs — loan amount, interest rate and tenure — into a monthly instalment and the total interest you'll pay over the life of the loan.

The two Malaysian methods

• Reducing balance — used for personal loans, mortgages and most modern bank products. Interest is recomputed each month on the outstanding balance, so early payments cut future interest.
• Flat rate — used for hire purchase (car loans). Interest is fixed on the original principal for the full tenure, regardless of how much you've paid down.

For the same headline rate, reducing balance is always cheaper.

Reducing-balance formula

Monthly Instalment = P × r × (1+r)^n / ((1+r)^n − 1)

Where P = principal, r = monthly rate (annual / 12), n = months.

Flat-rate formula

Monthly Instalment = (P + P × annual_rate × years) / (years × 12)

Try it

Run the numbers for your own scenario with the Personal Loan Calculator, which supports both flat-rate and reducing-balance side by side.