Table of Contents
Quick answer
BNM says financial service providers can no longer use flat-rate and/or Rule of 78 methods for calculating interest or profit for personal financing under the revised policy. When comparing a quote, look past the advertised rate and follow the amount still owed, the payment schedule and total cost.
Start by checking the calculation method named in the disclosure, the amount of principal or financing still outstanding, total interest or profit and every fee, then compare the result with your own cash flow and the current official wording.
The advertised percentage is only one line on the quote
BNM says financial service providers can no longer use flat-rate and/or Rule of 78 methods for calculating interest or profit for personal financing under the revised policy. When comparing a quote, look past the advertised rate and follow the amount still owed, the payment schedule and total cost.
Two percentages can look close while describing different calculation bases. Put the amount financed, period, fees and settlement treatment beside the schedule in ringgit before deciding that one quote is cheaper.
Read the quote as a cash-flow document
Ask for these items in the same comparison:
- the calculation method named in the disclosure
- the amount of principal or financing still outstanding
- total interest or profit and every fee
- the settlement amount if you exit early
| Check | What it lets you compare |
|---|---|
| calculation method | what the advertised number is actually describing |
| outstanding principal or financing | the balance that remains to be paid |
| total interest or profit and fees | the full ringgit cost, not just a rate |
| early-settlement amount | what leaving the arrangement would cost at that point |
A low rate can still be the wrong comparison
A low-looking percentage can describe a different calculation base from an effective rate. Do not compare two numbers until the period, amount financed, fees and settlement treatment are on the same page.
The decision is not about finding the smallest percentage in isolation. It is about finding out what the borrower will pay, when the balance falls and what happens if the financing ends early.
Ask for the ringgit version
Ask the provider to show the repayment schedule and total cost in ringgit. Keep the product disclosure and write down which rate is promotional, effective or only a headline.
Keep one comparison sheet with:
- the amount financed and repayment period
- the monthly schedule, total interest or profit and every fee
- the early-settlement quote and the date it applies to
If a salesperson gives you only a percentage, ask for the missing schedule. The schedule is where the cost becomes checkable.
Questions about comparing loan rates
Can I compare two loans by putting their advertised percentages side by side?
What does BNM's revised policy say about flat-rate or Rule of 78 methods?
Which document should I request from the provider?
How do I tell whether a rate is promotional or effective?
What is the simplest comparison to make?
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About the Author
Sources and verification notes
This article was prepared from the official pages below with an initial fact cutoff of 24 August 2026. Rates, limits, eligibility, operating hours and product terms can change; recheck the current source before acting. This is general financial education, not personalised advice.
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