1. What is the Car Loan EMI Formula?

The PMT formula calculates the fixed monthly payment (EMI) required to repay a car loan over a specified term. It accounts for both principal and interest components of the loan.

2. How Does the Calculator Work?

The calculator uses the PMT formula:

Where:

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

Explanation: The formula calculates the fixed payment needed to fully amortize the loan over its term, with early payments weighted more toward interest and later payments more toward principal.

3. Understanding Car Loan Calculations

Details: RAC car loans in Australia typically have interest rates between 5.69% to 8.99% p.a. The actual rate depends on credit score, loan term, and vehicle type.

4. Using the Calculator

Tips: Enter loan amount in AUD, annual interest rate (5.69-8.99% typical range), and loan term (1-7 years common). Results show monthly payment, total interest, and total repayment amount.

5. Frequently Asked Questions (FAQ)

Q1: What is the typical interest rate for RAC car loans?
A: Rates typically range from 5.69% to 8.99% p.a. depending on creditworthiness and loan terms.

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 additional fees?
A: RAC loans may include establishment fees (typically $150-$250) and monthly service fees ($5-$10). These aren't included in this calculation.

Q4: Can I make extra repayments?
A: Most RAC loans allow extra repayments without penalty, which can reduce total interest and loan term.

Q5: Is comprehensive insurance required?
A: Yes, RAC requires comprehensive insurance for financed vehicles as part of loan conditions.