function calculateKiborEffect() {
// Retrieve inputs using strict getElementById
var pInput = document.getElementById("principalPk");
var kInput = document.getElementById("benchmarkKibor");
var sInput = document.getElementById("bankSpread");
var tInput = document.getElementById("tenureYears");
var resultBox = document.getElementById("kiborResult");
var errorBox = document.getElementById("errorDisplay");
// Parse values
var P = parseFloat(pInput.value); // Principal
var K = parseFloat(kInput.value); // KIBOR
var S = parseFloat(sInput.value); // Spread
var T = parseFloat(tInput.value); // Tenure (Years)
// Validation
if (isNaN(P) || isNaN(K) || isNaN(S) || isNaN(T) || P <= 0 || T <= 0) {
errorBox.style.display = "block";
resultBox.style.display = "none";
return;
}
errorBox.style.display = "none";
// Calculation Logic specific to KIBOR based floating loans
// Effective Rate = KIBOR + Spread
var effectiveRatePercent = K + S;
// Convert annual rate to monthly decimal
var monthlyRate = (effectiveRatePercent / 100) / 12;
// Total number of months
var numMonths = T * 12;
// Amortization Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var x = Math.pow(1 + monthlyRate, numMonths);
var monthlyPayment = (P * monthlyRate * x) / (x – 1);
// Total amounts
var totalPayment = monthlyPayment * numMonths;
var totalMarkup = totalPayment – P;
// Formatting currency for PKR context
var formatter = new Intl.NumberFormat('en-PK', {
style: 'currency',
currency: 'PKR',
minimumFractionDigits: 0,
maximumFractionDigits: 0
});
// Display Results
document.getElementById("resEffectiveRate").innerHTML = effectiveRatePercent.toFixed(2) + "% (KIBOR " + K + "% + " + S + "%)";
document.getElementById("resMonthlyPayment").innerHTML = formatter.format(monthlyPayment);
document.getElementById("resTotalMarkup").innerHTML = formatter.format(totalMarkup);
document.getElementById("resTotalAmount").innerHTML = formatter.format(totalPayment);
resultBox.style.display = "block";
}
How to Calculate KIBOR Rate and Loan Liabilities
The Karachi Interbank Offered Rate (KIBOR) is the benchmark interest rate at which banks in Pakistan lend money to one another. For consumers and businesses, KIBOR is the primary reference rate used to determine the cost of floating-rate financial products, such as mortgages, auto financing, and corporate loans.
The Formula: KIBOR + Spread
Unlike fixed-rate loans, where the interest rate remains constant, KIBOR-based loans fluctuate. To calculate your actual applicable interest rate, you do not use the KIBOR rate alone. Instead, banks apply a formula consisting of two parts:
Effective Rate = Benchmark KIBOR + Bank Spread
Benchmark KIBOR: This is the variable component. It is usually the 6-month or 1-year KIBOR rate published by the State Bank of Pakistan (SBP).
Bank Spread (Margin): This is the fixed component determined by the bank's risk assessment of the borrower. It remains constant throughout the loan term (e.g., 2.5% or 3%).
Example Calculation
Let's assume you are taking a car loan of PKR 3,000,000 for 5 years. The bank quotes you a rate of "6-Month KIBOR + 3%".
Determine Current KIBOR: Assume the current 6-Month KIBOR is 21.00%.
Add the Spread: Add the bank's margin of 3.00%.
Calculate Effective Rate: 21.00% + 3.00% = 24.00% per annum.
Using this effective rate of 24%, the bank calculates your monthly installment. However, because KIBOR is variable, this rate will be recalculated periodically (usually every 6 months) based on the new KIBOR value at the time of reset. If KIBOR increases to 22%, your effective rate becomes 25%, increasing your monthly payments.
How KIBOR Itself is Calculated
While borrowers calculate their payments using the published rate, the KIBOR rate itself is calculated daily by the State Bank of Pakistan. It gathers ask-side quotes from designated contributing banks. To ensure accuracy, the highest and lowest quotes are excluded (trimmed), and the remaining quotes are averaged to produce the daily KIBOR rates for various tenures (1 week, 1 month, 3 months, 6 months, etc.).
Using the calculator above allows you to estimate your potential liability by inputting different KIBOR scenarios, helping you plan for rate fluctuations in the Pakistan financial market.