What is hire purchase in Malaysia?

A financing structure for vehicles where the financier owns the asset until the final instalment is paid. Governed by the Hire-Purchase Act 1967.

How is hire purchase monthly instalment calculated?

Monthly Instalment = (Loan Amount + Total Interest Cost) / Tenure Months. Total Interest Cost = Loan Amount × Flat Rate × Years.

What are total interest costs?

The total interest portion of a hire purchase financing, computed using the flat-rate method on the full financed amount.

Car Price − Deposit − Trade-in. It's the principal that the bank actually finances on your behalf.

Why does flat rate look lower than effective rate?

Flat rate charges interest on the original financed amount across the whole tenure. Effective rate restates this as the annualised reducing-balance equivalent — typically much higher.

Can I use this to calculate early settlement?

It produces an estimate using a Rule-of-78 approximation. The exact rebate formula must be verified against your HP agreement and the BNM HP Consumer Guide 2026.

Why should I request an official settlement quotation?

Only the bank's quotation reflects their exact rebate formula, rounding, settlement date and any fees or late charges.

Is this calculator official?

No. This is a planning tool — not an official BNM or bank calculator.

Buyer Calculator Car Sales Calculator

Hire Purchase Calculator Malaysia

Calculate Malaysian hire purchase monthly instalment, total interest, total paid to bank and optional early settlement estimate with transparent HP logic.

Inputs

Vehicle & financing

Vehicle price

On-the-road price of the car

Deposit

= 10.0% of vehicle price

Financing method

Rate stays fixed for the financing tenure. Interest is calculated on the outstanding principal using the reducing-balance method.

Effective interest rate (EIR), per year

Enter the annual rate quoted by the bank, matching the financing method above.

Loan period

yrs

= 84 months

More options

Trade-in value

Loan amount (override, optional)

Option fee

Documentation fee

Insurance

Road tax

Other upfront cost

Check affordability (optional)

Monthly salary

Existing monthly commitments

Extra payment simulation — optional

Extra payment each month

Start from month

Only use this simulation if the bank or financier allows extra payments to reduce principal.

Early settlement (optional)

Estimate early settlement

Monthly Instalment

RM 1,086.60

84 months · 7 yrs · EIR 3.50%

Enter salary to see affordability

Loan Amount

RM 81,000.00

Amount borrowed after deposit and trade-in

Total Interest Cost

RM 10,274.63

What you pay the bank over the loan period

Total Paid to Bank

RM 91,274.63

Loan amount + total interest cost

Upfront Payment

RM 9,000.00

Deposit and other fees paid at the start

Effective Rate

3.50%

Monthly Commitment

—

Portion of your salary used for this instalment

Total Out-of-Pocket

RM 100,274.63

Upfront payment + bank instalments

Vehicle Price

RM 90,000.00

Rate stays fixed for the financing tenure. Interest is calculated on the outstanding principal using the reducing-balance method.

Affordability

Enter your monthly salary to see how this instalment fits your budget.

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Your financing breakdown

Total paid to bank RM 91,274.63

Loan Amount

RM 81,000.00

88.7% of total paid to bank

Total Interest Cost

RM 10,274.63

11.3% — what the bank earns

Loan Amount vs Total Interest Cost

Upfront Payment Breakdown

DepositRM 9,000.00
Total Upfront PaymentRM 9,000.00

Rate Used

Rate entered (EIR)

3.50%

Effective annual rate

3.50%

Effective rate is an approximation for comparison only. Your bank's disclosed effective rate may differ.

Formula

Amount Financed = Cash Price − Deposit − Trade-in

Fixed / variable rate (2026): Monthly Rate i = (1 + EIR)^(1/12) − 1

Fixed / variable rate (2026): Monthly Instalment = P × i / (1 − (1 + i)^−n)

Legacy flat rate: Term Charges = Amount Financed × Flat Rate × Tenure Years

Legacy flat rate: Monthly Instalment = (Amount Financed + Term Charges) / Tenure Months

Total Amount Payable = Amount Financed + Term Charges + Option Fee + Documentation Fee

Total Upfront Cash = Deposit + Insurance + Road Tax + Documentation Fee + Other Upfront Cost

Effective Annual Rate ≈ (1 + Monthly IRR)^12 − 1

Assumptions

User-entered rate is used as-is, matching the financing method selected.
Fixed and variable rate methods use reducing-balance amortisation (Hire-Purchase (Amendment) Act 2026).
Variable rate results assume the current rate stays unchanged for the whole term.
Legacy flat rate applies to existing agreements and transition-period quotations only.
Equal monthly instalments.
No late payment charges unless entered.
No insurance renewal unless entered.
Early settlement figure is an estimate only.
Bank statement and HP agreement override calculator result.

Source & reference

Needs verification

BNM Hire Purchase Consumer Guide 2026

Bank Negara Malaysia · Last reviewed 2026-01-01

Reference for Malaysian hire purchase computation, term charges, and early settlement guidance. Exact rebate formula and rounding must be verified against the published PDF before being treated as authoritative.

This calculator is for estimation and learning only. Final rates, fees and settlement amounts depend on your bank or financing provider.

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