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 considers the principal amount, interest rate, and loan duration to determine the periodic payment.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

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

Explanation: The formula accounts for compound interest over the loan term, calculating a fixed payment that will pay off the loan plus interest by the end of the term.

3. Importance of Loan Payment Calculation

Details: Calculating your monthly payment helps with budgeting and ensures the loan is affordable. It also allows comparison between different loan offers in the UAE market.

4. Using the Calculator

Tips: Enter the total vehicle price in AED, annual interest rate (common UAE rates range from 3-8%), and loan term in years (typically 1-5 years in UAE).

5. Frequently Asked Questions (FAQ)

Q1: What is a typical auto loan term in UAE?
A: Most UAE auto loans range from 1-5 years, with some extending to 7 years for new cars.

Q2: What interest rates can I expect in UAE?
A: Rates vary by bank but typically range from 3-8% annually depending on your credit profile and the vehicle.

Q3: Does this include UAE insurance and registration?
A: No, this calculates base loan payments. Additional costs like insurance (required in UAE) and registration are separate.

Q4: Are there prepayment penalties in UAE?
A: Some UAE banks charge early settlement fees, typically 1% of the outstanding amount or 3 months' interest.

Q5: What's the maximum loan amount in UAE?
A: Most UAE banks finance up to 80-90% of the vehicle value for new cars and 70-80% for used cars.