Personal Loan Calculator Malaysia

Malaysian personal loans are quoted in two ways, and the calculator shows both so you can compare them fairly. A flat rate charges interest on the full amount you borrowed for the whole tenure. A reducing balance rate (also called the effective interest rate, or EIR) charges interest only on what you still owe each month.

The two formulas

Flat rate

• Total interest = Loan amount × Flat rate × Years
• Monthly instalment = (Loan amount + Total interest) ÷ Months

Reducing balance

• Monthly rate r = Annual rate ÷ 12
• Monthly instalment = P × r ÷ (1 − (1 + r)^−n), where P is the loan and n is the number of months
• Each month, interest = outstanding balance × r, and the rest of the instalment reduces the balance

Worked example 1: the calculator's default loan

You borrow RM50,000 over 5 years at 6.5%.

• At 6.5% flat: total interest = RM50,000 × 6.5% × 5 = RM16,250. Instalment = RM66,250 ÷ 60 = RM1,104.17.
• At 6.5% reducing: instalment ≈ RM978.31, total interest ≈ RM8,698.44.

Same headline number, but the flat-rate loan costs RM7,551.56 more. Restated as a yearly reducing-balance rate, 6.5% flat over 5 years is an effective interest rate (EIR) of 11.68% a year — the exact reducing-balance rate that gives the same monthly instalment. That's nearly double the quoted figure, which is why the calculator puts the flat rate next to its real yearly cost.

Worked example 2: comparing two offers

Bank A offers RM30,000 at 4.5% flat over 5 years. Bank B offers RM30,000 at 7% reducing over 5 years.

• Bank A: interest RM6,750, instalment RM612.50, effective rate about 8.3%
• Bank B: interest about RM5,642, instalment RM594.04

The "4.5%" offer looks cheaper but costs about RM1,108 more. Always compare offers on the effective rate or the total repayable, never on a flat rate against a reducing rate.

What affects your result

• Rate type. The real yearly cost of a flat rate is roughly 1.8 to 2 times the quoted figure.
• Tenure. Longer tenures cut the instalment but add interest. RM30,000 at 7% reducing costs RM594.04 a month over 5 years (RM5,642 interest) or RM452.78 over 7 years (RM8,034 interest).
• Fees and insurance. Stamp duty (0.5% of the loan), processing fees and any takaful or insurance premium are not in the instalment. Some are deducted from the amount you receive.
• Your profile. Banks price by income, employer, existing debts and credit record (CCRIS/CTOS), so the rate you're offered may differ from the advertised one.
• BNM rules. Under Bank Negara Malaysia's policy document on personal financing, banks must disclose the effective rate and the maximum tenure for bank personal financing is 10 years.

Using the calculator step by step

1. Enter the loan amount you plan to borrow, not the amount you'll receive after fees.
2. Enter the rate exactly as the bank quotes it and choose whether it is flat or reducing balance. If you're not sure, ask the bank for the effective interest rate (EIR); banks must disclose it.
3. Pick the tenure in years. Try two or three tenures to see the trade-off between instalment and total interest.
4. Read the headline: the flat rate next to its real yearly cost, and the monthly instalment for both methods.
5. Use the compare view to see the difference in total interest, then share the result or download it.

Common mistakes

• Comparing a flat rate with a reducing-balance rate. Convert to EIR first, or compare total repayable.
• Looking only at the instalment. A longer tenure feels cheaper each month but costs more overall.
• Forgetting the net amount. If fees are deducted upfront, you receive less than you borrow but still repay the full amount.
• Borrowing to the bank's limit. The bank's DSR limit is not your budget. Leave room for bills, savings and emergencies.
• Ignoring early settlement terms. Check for lock-in periods and how the settlement amount is worked out before you sign.

Before you apply

Check the instalment against your real take-home pay, not your gross salary, and keep your total debt repayments within what the bank's debt service ratio (DSR) allows and what your budget can carry. If you plan to settle early, reducing-balance loans save more, because interest stops as soon as the balance is paid. Treat the result as an estimate; the bank's offer letter is final.