1. What is the Auto Loan Payment Formula?

The auto loan payment formula calculates the fixed monthly payment required to repay a car loan over a specified term. It accounts for the principal amount, interest rate, and loan duration.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

• \( PMT \) — Monthly payment (AED)
• \( P \) — Principal loan amount (AED)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of payments (term in years × 12)

Explanation: The formula calculates the fixed payment that pays off the loan with interest over the specified term.

3. UAE Salary Considerations

Details: In the UAE, banks typically limit car loan payments to a maximum of 50% of your monthly salary. This calculator includes an affordability check based on this rule.

4. Using the Calculator

Tips: Enter the loan amount in AED, annual interest rate (%), loan term in years, and your monthly salary. The calculator will show the monthly payment and whether it's within the affordable range.

5. Frequently Asked Questions (FAQ)

Q1: What is the maximum loan term in UAE?
A: Most UAE banks offer car loans for up to 5 years (60 months), though some may extend to 7 years for new cars.

Q2: What interest rates can I expect in UAE?
A: Rates vary but typically range from 2.49% to 4.5% for new cars and 4% to 7% for used cars, depending on your bank and credit profile.

Q3: Are there other fees to consider?
A: Yes, UAE car loans often include processing fees (1% of loan amount), insurance, and registration fees.

Q4: Can I get 100% financing in UAE?
A: Most banks finance up to 80% of the car's value for new cars and 70-80% for used cars. Some may offer 100% financing with special promotions.

Q5: How does salary affect my loan eligibility?
A: Your salary determines both the maximum loan amount and the maximum monthly payment (capped at 50% of salary in most cases).