New Car Loan Repayment Calculator

EMI Formula:

\[ PMT = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

Monthly Payment (EMI):

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1. What is the EMI Formula?

The EMI (Equated Monthly Installment) formula calculates the fixed payment amount a borrower makes each month to repay a loan. It considers the principal amount, interest rate, and loan term.

2. How Does the Calculator Work?

The calculator uses the EMI formula:

\[ PMT = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

Where:

\( P \) — Principal loan amount (USD)
\( r \) — Monthly interest rate (annual rate ÷ 12 ÷ 100)
\( n \) — Loan term in months
\( PMT \) — Monthly payment amount (USD)

Explanation: The formula accounts for both principal repayment and interest payment components in each EMI.

3. Importance of EMI Calculation

Details: Calculating EMI helps borrowers understand their monthly financial commitment and plan their budget accordingly when taking a new car loan.

4. Using the Calculator

Tips: Enter principal amount in USD, annual interest rate (typically 5-7% for new cars), and loan term in months (usually 36-72 months for car loans).

5. Frequently Asked Questions (FAQ)

Q1: What are typical interest rates for new car loans?
A: New car loans typically range from 5-7% p.a., depending on credit score and loan term.

Q2: How does loan term affect my EMI?
A: Longer terms reduce EMI but increase total interest paid. Shorter terms increase EMI but reduce total interest.

Q3: What's included in the EMI payment?
A: Each EMI includes both principal repayment and interest payment components.

Q4: Can I prepay my car loan?
A: Most lenders allow prepayment, but some may charge prepayment penalties - check your loan terms.

Q5: How does down payment affect my loan?
A: Larger down payments reduce principal amount, resulting in lower EMIs and total interest.