1. What is Bank Islam Personal Loan?

Bank Islam Malaysia offers Shariah-compliant personal financing based on the concept of Tawarruq. The monthly payment is calculated using a diminishing balance method that complies with Islamic finance principles.

2. How Does the Calculator Work?

The calculator uses the Islamic financing formula:

Where:

• \( P \) — Principal amount (MYR)
• \( r \) — Monthly profit rate (annual rate divided by 12)
• \( n \) — Number of months
• \( PMT \) — Monthly payment (MYR)

Explanation: The formula calculates a fixed monthly payment that gradually pays down both principal and profit over the loan term.

3. Understanding the Amortization Table

Details: The amortization table shows how each payment is split between principal reduction and profit payment. Early payments have higher profit components, while later payments have higher principal components.

4. Using the Calculator

Tips: Enter principal amount in MYR (minimum RM1,000), annual profit rate (typical rates range from 4% to 10%), and loan term in months (usually 12-120 months).

5. Frequently Asked Questions (FAQ)

Q1: Is this calculator Shariah-compliant?
A: Yes, it follows the diminishing balance method approved by Shariah principles.

Q2: What's the difference between profit rate and interest rate?
A: While mathematically similar, profit rates in Islamic finance are derived from asset-based transactions rather than interest on money.

Q3: Are there any hidden fees?
A: This calculator shows only the principal and profit components. Actual loans may have processing fees or takaful (insurance) requirements.

Q4: Can I get early settlement?
A: Bank Islam typically allows early settlement with a rebate on unearned profit, calculated using the Rule of 78 or other approved methods.

Q5: What's the maximum financing amount?
A: Bank Islam usually offers personal financing up to RM200,000 depending on income and creditworthiness.