Hire Purchase Calculator Malaysia
Calculate your monthly instalment and compare Rule 78 vs Reducing Balance interest methods side by side. Free, instant, no sign-up required.
Loan Details
This calculator is for estimation purposes only. Actual amounts may vary based on your agreement terms. For accurate calculations, use the GreenFlow System.
Reducing Balance
Rule 78
Interest Difference: Reducing Balance saves you RM 848.10 in total interest compared to Rule 78 for this loan.
Repayment Schedule
| # | Instalment | Principal | Interest | Balance |
|---|---|---|---|---|
| 1 | 304.22 | 254.22 | 50.00 | 9,745.78 |
| 2 | 304.22 | 255.49 | 48.73 | 9,490.29 |
| 3 | 304.22 | 256.77 | 47.45 | 9,233.52 |
| 4 | 304.22 | 258.05 | 46.17 | 8,975.47 |
| 5 | 304.22 | 259.34 | 44.88 | 8,716.13 |
| 6 | 304.22 | 260.64 | 43.58 | 8,455.49 |
| 7 | 304.22 | 261.94 | 42.28 | 8,193.55 |
| 8 | 304.22 | 263.25 | 40.97 | 7,930.30 |
| 9 | 304.22 | 264.57 | 39.65 | 7,665.73 |
| 10 | 304.22 | 265.89 | 38.33 | 7,399.84 |
| 11 | 304.22 | 267.22 | 37.00 | 7,132.62 |
| 12 | 304.22 | 268.56 | 35.66 | 6,864.06 |
| 13 | 304.22 | 269.90 | 34.32 | 6,594.16 |
| 14 | 304.22 | 271.25 | 32.97 | 6,322.91 |
| 15 | 304.22 | 272.60 | 31.61 | 6,050.31 |
| 16 | 304.22 | 273.97 | 30.25 | 5,776.34 |
| 17 | 304.22 | 275.34 | 28.88 | 5,501.00 |
| 18 | 304.22 | 276.71 | 27.51 | 5,224.29 |
| 19 | 304.22 | 278.10 | 26.12 | 4,946.19 |
| 20 | 304.22 | 279.49 | 24.73 | 4,666.70 |
| 21 | 304.22 | 280.89 | 23.33 | 4,385.82 |
| 22 | 304.22 | 282.29 | 21.93 | 4,103.53 |
| 23 | 304.22 | 283.70 | 20.52 | 3,819.82 |
| 24 | 304.22 | 285.12 | 19.10 | 3,534.70 |
| 25 | 304.22 | 286.55 | 17.67 | 3,248.16 |
| 26 | 304.22 | 287.98 | 16.24 | 2,960.18 |
| 27 | 304.22 | 289.42 | 14.80 | 2,670.76 |
| 28 | 304.22 | 290.87 | 13.35 | 2,379.90 |
| 29 | 304.22 | 292.32 | 11.90 | 2,087.58 |
| 30 | 304.22 | 293.78 | 10.44 | 1,793.79 |
| 31 | 304.22 | 295.25 | 8.97 | 1,498.54 |
| 32 | 304.22 | 296.73 | 7.49 | 1,201.82 |
| 33 | 304.22 | 298.21 | 6.01 | 903.61 |
| 34 | 304.22 | 299.70 | 4.52 | 603.91 |
| 35 | 304.22 | 301.20 | 3.02 | 302.71 |
| 36 | 304.22 | 302.71 | 1.51 | 0.00 |
Understanding Hire Purchase Interest Methods
Learn the difference between Rule 78 and Reducing Balance — the two most common hire purchase calculation methods in Malaysia.
Rule 78 (Sum of Digits)
The traditional hire purchase method where interest is front-loaded. Total interest = Principal x Rate x Years. The interest is then distributed across months using the Sum of Digits formula — earlier months carry more interest.
- Standard for motorcycle HP in Malaysia
- Higher total interest paid vs Reducing Balance
- Early settlement rebate decreases over time
Reducing Balance
Also called Effective Interest Rate. Interest is calculated monthly on the remaining outstanding principal. As you pay down the loan, the interest portion of each instalment decreases and the principal portion increases.
- Used by banks and larger finance companies
- Lower total interest paid — fairer to the hirer
- Compliant with Bank Negara Malaysia guidelines
Frequently Asked Questions
How is hire purchase interest calculated using Rule 78?
Total interest = Principal x Annual Rate x (Tenure in months / 12). This total is then distributed across months using the Sum of Digits formula. Month 1 gets the highest share, and the last month gets the smallest. For example, on a 36-month loan, month 1 gets 36/666 of total interest, month 2 gets 35/666, and so on.
How does Reducing Balance interest work?
Each month, interest is calculated on the outstanding principal balance: Monthly Interest = Outstanding Balance x (Annual Rate / 12). The instalment stays the same, but the interest portion decreases each month while the principal portion increases.
Which method costs the hirer less — Rule 78 or Reducing Balance?
Reducing Balance always results in lower total interest paid compared to Rule 78 at the same quoted rate. This is because Rule 78 calculates interest on the full original principal for the entire tenure, while Reducing Balance only charges interest on what you still owe.
What interest rate do motorcycle dealers in Malaysia typically charge?
Motorcycle hire purchase rates in Malaysia typically range from 4% to 8% per annum depending on the dealer, brand, and hirer creditworthiness. This calculator helps you estimate instalments at any rate.
Can I use this calculator for car hire purchase?
Yes, this calculator works for any hire purchase loan — motorcycles, cars, machinery, or equipment. Just enter your financed amount, interest rate, and tenure to see the results.
Need a Full Hire Purchase Management System?
GreenFlow automates instalment tracking, overdue interest, letter generation, and more — for Malaysian motor dealers and finance companies.