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Written by the Loankira editorial team · Last reviewed: 28 October 2026

Early Settlement Calculator: Hire Purchase Rebate, MalaysiaKalkulator Penyelesaian Awal Sewa Beli Malaysia 2026

Settling a hire purchase early cuts interest - the law changed on 1 June 2026, so the method depends on your agreement date.

Menyelesaikan sewa beli awal mengurangkan faedah - undang-undang berubah 1 Jun 2026, jadi kaedah bergantung pada tarikh perjanjian.

LK

Written and checked by the Loankira editorial team

Last reviewed 28 October 2026. Figures follow Malaysian bank practice and the published statutes; where a bank sets its own policy we say so. How we check

Your agreementPerjanjian anda

SettlementPenyelesaian

Monthly instalmentAnsuran bulanan–
Payments leftBayaran berbaki–
Interest rebateRebat faedah–
Amount to settleJumlah penyelesaian–
Saved vs paying onJimat vs terus bayar–

Rule of 78 rebate = n(n+1) / N(N+1) × total interest, where n is the months left and N the original tenure. The Hire-Purchase (Amendment) Act 2026 takes effect 1 June 2026: new agreements must use reducing balance and EIR, and existing Rule of 78 agreements get a bank goodwill discount. Insurance, repossession fees and arrears sit outside this figure.

Rebat Rule of 78 = n(n+1) / N(N+1) × jumlah faedah, dengan n bulan berbaki dan N tempoh asal. Akta Sewa Beli (Pindaan) 2026 berkuat kuasa 1 Jun 2026: perjanjian baru wajib guna baki berkurangan dan EIR, manakala perjanjian Rule of 78 sedia ada dapat diskaun muhibah bank. Insurans, fi tarik dan tunggakan tidak termasuk.

Why the settlement figure is not the instalments left

A hire purchase charges its whole finance charge up front and spreads it flat across the tenure. Paying off early entitles you to the unearned part back, which is what a rebate is. Without the rebate, settling in month 24 of 84 would mean paying four more years of interest you never used, so the settlement letter is always below the remaining instalments and always above the outstanding principal.

Rule of 78, in one paragraph

The rebate is total interest multiplied by n(n+1) divided by N(N+1), where N is the original tenure in months and n the months left. Interest is treated as front-loaded, so the rebate is generous early and thins fast: on the example below, settling at month 24 rebates RM7,320, and settling at month 60 would rebate barely a tenth of that.

The law changed on 1 June 2026

The Hire-Purchase (Amendment) Act 2026 took effect on 1 June 2026. Agreements from that date must use a reducing-balance method with an effective interest rate disclosed, and settlement is the outstanding principal plus interest accrued to the settlement date. Existing Rule of 78 agreements stay on the old method, softened by a goodwill discount banks agreed to pay. Which method applies to you therefore depends on the date you signed, not the date you ask.

Worked example: RM60,000 over 84 months at 3.4% flat

The instalment is RM884 and 24 months in there are 60 left, or RM53,057 of instalments. The Rule of 78 rebate on those 60 months is RM7,320, so the settlement figure is RM45,737. Under reducing balance at an equivalent rate the figure lands within a few tens of ringgit of that, which is the point: the two methods converge when the effective rate is set honestly.

What sits outside the settlement figure

Insurance premium for the remaining cover, repossession or documentation fees, arrears and any unpaid instalments are added by the bank and are not in this estimate. Ask for the settlement letter in writing with each line itemised, valid to a stated date, and compare that against this figure before you release the money.

Before you release the money

Ask the bank for a written settlement letter, valid to a stated date, with the rebate, the arrears and any fees itemised separately. Check the date is long enough to move funds. Pay from an account in your own name and get a receipt that names the facility, then confirm in CCRIS a month later that the balance reads zero. Keep the letter and the receipt: a settled facility that still shows a balance is a bank error, and the paperwork is what corrects it.

Frequently asked

Which method applies to my agreement?

The one in force when you signed. Agreements dated before 1 June 2026 stay on Rule of 78, with a goodwill discount from the bank; agreements from 1 June 2026 use reducing balance.

Is the goodwill discount guaranteed?

It is a commitment banks gave, not a statutory formula, so the amount is theirs to set. Ask for it in writing on the settlement letter and query any figure that does not show it.

Does settling early mark my CCRIS record?

No. The facility is recorded as settled with a zero balance, which reads positively. What hurts is arrears before settlement, not the early payoff itself.

Does the same method apply to a personal loan?

No. Personal loans are quoted on reducing balance already, so there is no Rule of 78 rebate; settlement is the outstanding principal plus accrued interest and any early-settlement fee in the contract.

Related

Sources

Last reviewed: 28 October 2026. Figures are general information, not financial, tax or legal advice. Rules change; confirm with your bank or the relevant agency.