Financing instalment calculator
Compare monthly instalments and total financing charges under flat-rate and reducing-balance calculations.
- Monthly installment (fixed percentage)
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- Gross profit (fixed percentage)
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- Monthly Installment (Decrease Balance)
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- Gross profit (decreasing balance)
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- Actual flat rate
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Fixed Ratio (Flat)
Profit = Amount × Annual Percentage × The number of years, and the amount and profit is divided equally over months. Common in financing Murabaha for cars and goods.
Reduced balance
Profit is calculated every month on the remaining balance only, so the total profit is much less for the same. So always compare with the actual rather than nominal rate.
Frequently asked questions
Why is the actual rate different from the nominal?
Because the fixed percentage is calculated on the full amount throughout the duration even though you pay it gradually, the actual rate is almost double the nominal ratio.