1. What is the Car Loan Payment Formula?

The PMT formula calculates the fixed monthly payment required to repay a car loan over a specified term, including interest. It's widely used by banks and financial institutions in India for used car loans.

2. How Does the Calculator Work?

The calculator uses the PMT formula:

Where:

• \( PMT \) — Monthly payment (₹)
• \( P \) — Principal loan amount (₹)
• \( r \) — 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 fully amortize the loan.

3. Importance of Loan Calculation

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

4. Using the Calculator

Tips: Enter loan amount in ₹, annual interest rate in %, and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is typical interest rate for used car loans in India?
A: Rates typically range from 9% to 15% per annum depending on credit score, loan term, and vehicle age.

Q2: How does loan term affect monthly payments?
A: Longer terms reduce monthly payments but increase total interest paid over the loan life.

Q3: Are there additional charges in Indian car loans?
A: Yes, processing fees (0.5-2% of loan amount), insurance, and possible prepayment charges may apply.

Q4: What's the maximum loan term for used cars in India?
A: Typically 5-7 years, but shorter for older vehicles (maximum age + loan term usually capped at 10 years).

Q5: How can I reduce my car loan interest?
A: Make larger down payment, improve credit score, negotiate lower rate, or opt for shorter loan term.