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, 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 (loan term in years × 12)

Explanation: The formula accounts for compound interest over the loan term, calculating the fixed payment needed to pay off the loan completely by the end of the term.

3. Importance of Loan Calculation

Details: Accurate payment calculation helps borrowers understand their financial commitment, compare loan offers, and budget effectively for their car purchase in Dubai.

4. Using the Calculator

Tips: Enter the total loan amount in AED, annual interest rate (percentage), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

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

Q2: What interest rates can I expect in Dubai?
A: Rates vary by bank and customer profile but typically range from 2.5% to 5% for UAE residents.

Q3: Does this include insurance or other fees?
A: No, this calculates only the principal and interest payment. Comprehensive insurance and processing fees are additional.

Q4: Can I calculate partial year terms?
A: This calculator uses whole years. For partial years, you would need to enter the total number of months.

Q5: How does down payment affect the calculation?
A: The loan amount (P) should be the total car price minus any down payment or trade-in value.