1. What is the Car Loan Payment Formula?

The car loan payment formula calculates the fixed monthly payment required to repay a car loan over a specified term. It accounts for the principal amount, annual 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 covers both principal and interest each month, ensuring the loan is paid off by the end of the term.

3. Importance of Loan Calculation

Details: Understanding your monthly payment helps with budgeting and ensures the loan is affordable. It also helps compare different loan offers.

4. Using the Calculator

Tips: Enter the loan amount in AED, annual interest rate (without % sign), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical car loan interest rate in UAE for 2025?
A: Rates vary but typically range from 2.5% to 5% for new cars, depending on credit score and loan term.

Q2: How does loan term affect payments?
A: Longer terms reduce monthly payments but increase total interest paid. Shorter terms have higher payments but lower total cost.

Q3: Are there other costs besides the monthly payment?
A: Yes, consider insurance, registration, maintenance, and potential down payment when budgeting.

Q4: Can I pay off my loan early?
A: Most UAE banks allow early repayment but may charge a fee (usually 1% of remaining balance).

Q5: What's better - lower monthly payment or shorter term?
A: Depends on your budget. Shorter terms save money overall but require higher monthly payments.