1. What is the Car Loan Formula?

The car loan formula calculates the fixed monthly payment (PMT) required to repay a loan over a specified term. This is the standard formula used by banks and financial institutions in Malaysia for calculating car loan repayments.

2. How Does the Calculator Work?

The calculator uses the car loan formula:

Where:

• \( PMT \) — Monthly payment (MYR)
• \( P \) — Principal loan amount (MYR)
• \( r \) — Monthly interest rate (annual rate divided by 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 covers both principal and interest each month.

3. Importance of Loan Calculation

Details: Accurate loan calculation helps borrowers understand their financial commitment, compare different loan offers, and plan their budgets effectively.

4. Using the Calculator

Tips: Enter the loan amount in MYR, annual interest rate in percentage, and loan term in years. All values must be valid (amount > 0, rate ≥ 0, term ≥ 1 year).

5. Frequently Asked Questions (FAQ)

Q1: What is a typical car loan interest rate in Malaysia?
A: As of 2023, rates typically range from 2.5% to 4.5% depending on the bank, loan tenure, and whether it's for new or used cars.

Q2: What is the maximum loan tenure for cars in Malaysia?
A: Typically up to 9 years for new cars and up to 7 years for used cars, depending on the bank's policies.

Q3: Does this include insurance and other fees?
A: No, this calculates only the principal and interest. Additional costs like insurance, road tax, and processing fees are separate.

Q4: Why is my actual bank payment slightly different?
A: Banks may use slightly different calculation methods or include additional fees. Always confirm with your bank for exact amounts.

Q5: Can I use this for other types of loans?
A: Yes, this formula works for any fixed-rate installment loan, though terms and conditions may vary by loan type.