1. What is Car Loan Affordability?

The car loan affordability calculator determines how much you can borrow based on your monthly budget, interest rate, and loan term. It helps Malaysians plan their car purchases within their financial means.

2. How Does the Calculator Work?

The calculator uses the loan affordability formula:

Where:

• \( P \) — Maximum loan amount (MYR)
• \( PMT \) — Affordable monthly payment (MYR)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of monthly payments

Explanation: The formula calculates the present value of a series of future payments at a given interest rate.

3. Importance of Loan Affordability

Details: Calculating affordability helps prevent over-borrowing, ensures manageable monthly payments, and maintains healthy debt-to-income ratios.

4. Using the Calculator

Tips: Enter your comfortable monthly payment, current interest rates (typically 2.88-4% in Malaysia), and preferred loan term (1-9 years). The calculator will show the maximum loan amount you can afford.

5. Frequently Asked Questions (FAQ)

Q1: What's the typical car loan interest rate in Malaysia?
A: Rates typically range from 2.88% to 4% p.a. depending on the bank, loan term, and your credit profile.

Q2: How much of my income should go to car payments?
A: Financial experts recommend keeping car payments below 15-20% of your monthly take-home pay.

Q3: What loan terms are available in Malaysia?
A: Most banks offer 1-9 year terms, with 5-7 years being most common for new cars.

Q4: Does this include insurance and road tax?
A: No, this calculates loan payments only. Remember to budget separately for insurance, road tax, and maintenance.

Q5: How accurate is this calculator?
A: It provides a good estimate, but actual loan offers may vary based on your credit score and the bank's specific terms.