How to Calculate Car Loan Interest and Instalment
Taking up a car loan (also known as hire purchase) is the most common approach when buying a car. In this article, we’ll show you how simple it is to calculate your monthly interest and instalment for a conventional car loan in Malaysia. All you need is a calculator and you’re good to go!
2 Easy Steps to Calculate Car Loan Interest and Instalment
First, determine the values of the loan amount, loan period and interest rate of your car loan, as follow:
Loan Amount = A
Total Loan Period = B (years)
Interest Rate = C
Now, use the following formulas to determine the total interest, monthly interest and monthly instalment of your car loan:
Your Total Interest = C/100 x A x B = X
Your Monthly Interest = X / (B x 12)
Your Monthly Instalment = (A + X) / (B x 12)
Let’s Put This Into Practice, Shall We?
Take note that the above calculation is based on a flat interest rate for the full loan amount over the entire loan period. In Malaysia, most conventional car loans use this method of calculation.
Need a simpler option?
Why not go direct to our car loan comparison table to check out the interests and instalments we’ve already worked out for you!