Motor Car Finance Calculator Pakistan

Monthly Payment Formula:

\[ \text{Monthly Payment} = \frac{\text{Loan Amount} \times \frac{\text{Interest Rate}}{12}}{1 - (1 + \frac{\text{Interest Rate}}{12})^{-\text{Loan Term}}} \]

Monthly Payment:

Total Payment:

Total Interest:

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1. What is Car Loan EMI?

The Equated Monthly Installment (EMI) is the fixed payment amount a borrower pays to a lender at a specified date each calendar month. For car loans in Pakistan, EMI includes both principal and interest components.

2. How Does the Calculator Work?

The calculator uses the standard EMI formula:

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

Where:

\( P \) — Loan amount (principal)
\( r \) — Monthly interest rate (annual rate ÷ 12)
\( n \) — Loan term in months

Explanation: The formula calculates the fixed monthly payment that would pay off the loan over its term with constant payments.

3. Importance of Loan Calculation

Details: Calculating EMI helps borrowers understand their repayment obligations, compare loan offers, and plan their finances before committing to a car purchase.

4. Using the Calculator

Tips: Enter loan amount in PKR, annual interest rate as decimal (e.g., 0.13 for 13%), and loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is the typical car loan interest rate in Pakistan?
A: As of 2023, rates typically range from 12% to 20% per annum depending on the bank and borrower's credit profile.

Q2: What is the maximum car loan term in Pakistan?
A: Most banks offer terms up to 5-7 years (60-84 months) for new cars, shorter for used cars.

Q3: Are there any hidden charges in car loans?
A: Some banks charge processing fees (1-2% of loan amount), insurance premiums, and early payment penalties.

Q4: Can I prepay my car loan?
A: Most banks allow prepayment after 6-12 months, often with a prepayment penalty of 1-3% of outstanding amount.

Q5: What documents are needed for car loan in Pakistan?
A: Typically requires CNIC, proof of income, bank statements, vehicle documents, and sometimes down payment proof.