Personal Loan (Flat Rate) Formula Explained, With Examples
Every personal loan (flat rate) result comes from one formula. Once you understand what goes into it, you can sanity-check any figure you are given, whether by an employer, a bank, a teacher or another website.
The formula
Interest = P × flat rate × years; EIR is solved from the instalment stream.
What each input means
- Loan amount (S$): the value you enter in the calculator.
- Flat rate (% a year): the value you enter in the calculator.
- Term (years): the value you enter in the calculator.
Example
For example, with these inputs:
- Loan amount (S$): 15,000
- Flat rate (% a year): 3.5
- Term (years): 3
the calculator returns:
- Monthly instalment: S$460.42
- Total interest: S$1,575.00
- Effective interest rate: 6.60%
How the result changes
The table keeps the other inputs at their example values and changes loan amount (s$).
| Loan amount (S$) | Monthly instalment | Total interest | Effective interest rate |
|---|---|---|---|
| 15,000 | S$460.42 | S$1,575.00 | 6.60% |
| 7,500 | S$230.21 | S$787.50 | 6.60% |
| 11,250 | S$345.31 | S$1,181.25 | 6.60% |
| 18,750 | S$575.52 | S$1,968.75 | 6.60% |
| 22,500 | S$690.62 | S$2,362.50 | 6.60% |
Why it matters
Interest rates, instalments and returns compound over years, so a small difference in rate or tenure turns into thousands of dollars. Working the numbers out yourself makes it easier to compare bank offers, avoid expensive debt and plan savings goals.
Cars in Singapore carry costs found almost nowhere else, including the Certificate of Entitlement and the Additional Registration Fee. Loans are capped at 60% or 70% of the price depending on the car's Open Market Value, and the maximum tenure is seven years.
Calculators make it easy to compare scenarios side by side: a shorter tenure versus a lower instalment, a higher deposit versus more cash in hand, or paying down debt versus investing. Seeing the total cost, not just the monthly figure, usually makes the better choice obvious.
Inflation erodes buying power, so a savings goal set in today's dollars needs to be adjusted upwards for the years it will take to reach it. Singapore's core inflation has varied widely over the past decade, so it is worth testing a range of rates.
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Use the Personal Loan Calculator (Flat Rate) to plug in your own numbers.
Run your own numbers: Personal Loan Calculator (Flat Rate)