Car Loan Calculator Malaysia 2026

Work out the monthly instalment, total interest and the real interest rate behind a car loan quote in Malaysia, on either the reducing balance or the old flat rate method.

Preview page. The rates are checked against official sources; the page is awaiting final review before it is published.

Result

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This is an estimate for planning. Confirm the final figure with the bank, JPJ or LHDN before you commit.

How it's calculated

A reducing balance loan charges interest every month on what you still owe. The bank sets a fixed instalment so that, after the last payment, the balance is exactly zero. Each month part of the instalment pays that month's interest and the rest reduces the principal, so the interest share shrinks over time and the principal share grows.

The instalment formula, with P the loan amount, r the monthly rate (the yearly EIR divided by 12) and n the number of months:

instalment = P × r ÷ (1 − (1 + r)^−n)

Worked example (the default inputs). An RM 80,000.00 car with a 10% down payment of RM 8,000.00 leaves a loan of RM 72,000.00. At 4.5% EIR over 7 years, the monthly rate is 0.375% and n is 84. The instalment is 72,000 × 0.00375 ÷ (1 − 1.00375⁻⁸⁴) = RM 1,000.81.

In month one the interest is 72,000 × 0.375% = RM 270.00 and the principal repaid is RM 730.81. Over the full term the interest adds up to RM 12,068.18, the total paid to the bank is RM 84,068.18, and the car costs RM 92,068.18 including the down payment.

Add an extra RM 200.00 a month and the loan is cleared in 69 months instead of 84, saving 15 instalments and RM 2,357.39 of interest.

A flat rate works differently. Interest is charged on the full original amount for every year of the term and added up front: interest = loan × flat rate × years, and the instalment is simply (loan + interest) ÷ months. On RM 72,000.00 at 2.5% flat over 7 years the interest is RM 12,600.00 and the instalment RM 1,007.14. That looks cheaper than 4.5% EIR but it is not: the equivalent EIR of that flat rate is 4.69%, because you keep paying interest on money you have already repaid.

The converter finds the EIR by searching for the reducing balance rate whose instalment matches the flat rate instalment for the same amount and term. For 2.3% flat on this loan it is 4.33% EIR.

What changed on 1 June 2026

The Hire-Purchase (Amendment) Act 2026 took effect on 1 June 2026. New hire purchase agreements under it are priced on the reducing balance method with a disclosed effective interest rate, and the flat rate and Rule of 78 are abolished for them. Banks have a transition period to 31 March 2027 to update their systems, and until a bank is ready it may still sign flat rate agreements, so ask which method your quote uses. Agreements signed before the change keep their original terms, including the Rule of 78 rebate on early settlement, unless you and the bank agree to switch. If you are comparing a flat rate quote with an EIR quote, convert the flat rate first.

Choosing the tenure

A longer tenure lowers the instalment but raises the total interest, and the car is worth less than the balance owed for longer. On the default loan, 5 years instead of 7 raises the instalment to about RM 1,342 but cuts total interest by roughly a third. Banks allow up to nine years on a passenger vehicle; most people land between five and seven. Use the schedule below the result to see how slowly the balance falls in the early years.

FAQ

What is EIR on a car loan?

The effective interest rate is the yearly rate applied to the balance you still owe, month by month, that produces your instalment. It is the only number that lets you compare two quotes fairly, because a flat rate hides the fact that you keep paying interest on money you have already returned. Since 1 June 2026 every new hire purchase agreement in Malaysia must state its EIR.

A 2.3% flat rate equals what EIR?

On a seven-year loan, about 4.3% EIR. The conversion depends a little on tenure, so use the converter on this page with your own loan amount and term. A good rule of thumb is that the EIR is roughly 1.8 to 1.9 times the flat rate for typical car loan tenures.

Can I pay extra on a car loan?

On a reducing balance loan an extra payment that the bank applies to the principal cuts future interest and shortens the term, which is what this calculator assumes. Some banks instead treat extra money as prepaid instalments, which saves nothing. Ask the bank in writing how prepayments are applied before you rely on the savings shown here. On an older flat-rate agreement, extra payments do not reduce the interest; only a full early settlement with the statutory rebate does.

Is a car loan fixed or variable rate?

Almost all hire purchase in Malaysia is at a fixed rate for the whole term, so the instalment never changes. Variable-rate hire purchase exists but is rare. This calculator assumes a fixed rate for the full tenure.

Does the new law cover Islamic hire purchase (AITAB)?

Islamic hire purchase is offered by the same banks and quoted with a profit rate instead of an interest rate. The arithmetic on this page works the same way for a profit rate on the reducing balance. Whether every provision of the amended Act applies to AITAB facilities is a point to confirm with the bank or the Ministry of Domestic Trade and Cost of Living.

Sources

Verified against official sources Rates last checked: 21 October 2026