Malaysia · Flat vs Reducing · 2026
Personal Loan Calculator Malaysia
Compare flat rate and reducing balance personal loans. See monthly instalment, total interest, effective total cost and affordability using a modern infographic-style layout.
True Cost Comparison
Flat vs Reducing — same loan, very different cost
Reducing balance saves you RM 7,551.56 in interest over 60 months at the same 6.50% rate.
Ad-style
Flat Rate View
Interest on original loan
Monthly Payment
RM 1,104.17
× 60 months
Total Interest
RM 16,250.00
Total Repayment
RM 66,250.00
Effective Total Cost
RM 66,250.00
Approx. Effective Rate
12.79%
Cheaper
True cost
Reducing Balance View
Interest on outstanding balance
Monthly Payment
RM 978.31
× 60 months
Total Interest
RM 8,698.44
Total Repayment
RM 58,698.44
Effective Total Cost
RM 58,698.44
Approx. Effective Rate
6.50%
Side-by-side
Flat vs Reducing across key metrics
The numbers, head-to-head
| Metric | Flat Rate | Reducing Balance | You save (Reducing) |
|---|---|---|---|
| Monthly Payment | RM 1,104.17 | RM 978.31 | RM 125.86 |
| Interest / Profit Cost | RM 16,250.00 | RM 8,698.44 | RM 7,551.56 |
| Total Cost of Borrowing | RM 66,250.00 | RM 58,698.44 | RM 7,551.56 |
| Effective Total Cost (with fees) | RM 66,250.00 | RM 58,698.44 | RM 7,551.56 |
| Cash You Receive | RM 50,000.00 | RM 50,000.00 | — |
| Approx. Effective Annual Rate | 12.79% | 6.50% | 6.29% |
Why this matters: Flat rate looks simpler in ads, but reducing balance better reflects how interest is actually charged on what you still owe. For a 6.50% headline rate over 60 months, the flat-rate effective annual cost is roughly 12.79% — almost double.
Methodology & formulas
- Flat: Total Interest = Loan × Rate × Years; Monthly = (Loan + Interest) / Months
- Reducing: Monthly = P × r / (1 − (1+r)−n), r = annual rate / 12
- Effective rate (flat → reducing): ≈ 2n / (n+1) × flat rate
- Net cash: Loan − Processing − Stamp duty − Insurance − Disbursement
Last reviewed: 2026-01-01 · Reference: Bank Negara Malaysia
Assumptions
- Equal monthly instalments throughout tenure
- No late payment charges modelled
- No early settlement rebate unless estimated separately
- Fees are upfront and entered by user
- Interest / profit rate is annual (per year)
- Results may differ from actual bank quotation due to rounding, insurance bundles or promotional rates
Frequently asked questions
Frequently asked
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