Under the old Rule of 78, interest was front-loaded, so if you settled early, you’d be shocked by how little the principal had dropped. With the Reducing Balance (EIR) method starting June 1, 2026, the settlement amount is simply the remaining principal.
Car Loan Settlement Calculator
Compare early settlement under the Hire Purchase (Amendment) Act 2026.
Legal Disclaimer: This calculator provides an estimation based on the Hire Purchase (Amendment) Act 2026.
1. "New Settlement" estimates the reducing balance principal using the Effective Interest Rate (EIR) equivalent.
2. "Old Settlement" uses the Rule of 78 formula.
3. Actual settlement sums are subject to the bank's final Product Disclosure Sheet (PDS) and may include daily rest interest or administrative fees.
Starting June 1, 2026, the Rule of 78 is abolished for all new hire purchase agreements.