Lower instalment is easy - lower total cost is the honest test. Compare remaining payments against the new loan plus rolled-in fees.
Written and checked by the Loankira editorial team
Last reviewed 23 October 2026. Figures follow Malaysian bank practice and the published statutes; where a bank sets its own policy we say so. How we check a page · Who writes here
Compares total remaining payments at the current instalment profile against the new loan plus rolled-in costs. Extending tenure lowers the monthly figure almost always — the honest test is the whole-term total, shown here. The deduction on your payslip comes off first, so weigh the new instalment against what remains after it rather than against gross pay.
Say the car is worth RM60,000, RM42,000 is outstanding on the current hire-purchase, and the settlement figure after the rebate is RM38,500. A refinance of RM45,000 over five years at 3.4% flat costs RM3,877.50 a month and RM7,650 in interest, and releases about RM6,500 in cash after settlement and fees.
| Item | Value used |
|---|---|
| Market value and outstanding | RM60,000 and RM42,000 |
| Settlement after rebate | RM38,500 (rule of 78 rebate applied) |
| New facility | RM45,000, 5 years, 3.4% flat |
| Fees | RM500 bank and documentation |
| Excluded | Insurance, late charges, early-settlement penalty on the new loan |
The rebate. Settling early on a flat-rate hire-purchase earns a rule of 78 rebate that falls fast. Settle at month 14 instead of month 24 and the outstanding balance is higher, so less cash comes out.
New tenure. A 7-year tenure lowers the instalment to about RM2,930 but adds roughly RM3,000 of interest and keeps the car as collateral longer.
Vehicle age. Most lenders cap refinancing at 10 to 12 years from first registration, with margin cut for older cars. Past that, the loan may not be available at all.
The rate. Flat rates on used-car refinancing sit well above home loan rates. Compare the effective rate, not the flat rate, against the loan you already hold.
Interest is flat-rate hire-purchase maths (principal × rate × years), the rebate follows the rule of 78 as set out in the Hire Purchase Act 1967, and settlement is quoted by the bank in writing. The calculator repeats the same arithmetic for your own figures.
Rates: housing loan rates, tracked monthly · Embed: free instalment calculator widget · About · Editorial policy