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Car loan calculator (hire purchase)
Car loans in Malaysia are usually charged at a flat rate: interest is worked out on the original amount for the whole tenure. This finance calculator works out the monthly instalment and total interest, then converts that flat rate into the reducing-balance effective rate — the figure you should compare with other loans.
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Flat rate versus effective rate
With a flat rate, interest = loan amount × rate × years, spread equally over every month — even though your balance keeps falling. That is why a flat rate that looks low is really almost twice as much when stated as a reducing-balance rate. The calculator solves that effective rate numerically: the reducing-balance rate that gives the same instalment.
A bigger deposit or a shorter tenure reduces total interest; the maximum tenure and hire-purchase terms follow the law and current bank policy.
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Frequently asked questions
Why is the effective rate higher than the flat rate?
Because the flat rate is charged on the original amount for the whole tenure, even though you repay part of it every month. The effective rate expresses the same cost on the balance you actually owe at each point in time.
Does this calculator include insurance and fees?
No — it works out the loan instalment and interest only. Vehicle insurance, road tax and processing fees are paid separately; enter the correct on-the-road price for a closer estimate.
Can a car loan be claimed as a business expense?
For Form B business owners, interest on a business vehicle loan and capital allowances on the vehicle are subject to LHDN limits — see our Form B capital allowances page, which follows the current rules.