1. What is an EMI Calculator?

The EMI (Equated Monthly Installment) calculator helps determine monthly payments for motor loans in the Philippines, considering your salary to ensure affordability. It calculates the fixed payment amount you'll need to pay each month to clear your loan.

2. How Does the Calculator Work?

The calculator uses the standard EMI formula:

Where:

• \( P \) — Loan principal amount (PHP)
• \( r \) — Monthly interest rate (annual rate divided by 12)
• \( n \) — Loan term in months

Explanation: The formula calculates the fixed monthly payment that includes both principal and interest components over the loan term.

3. Importance of Salary-Based EMI Calculation

Details: Financial experts recommend that your EMI should not exceed 30-40% of your monthly salary. This calculator helps you determine if the loan is affordable based on your income.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate (common rates in Philippines are 5-15%), loan term (typically 12-60 months), and your monthly salary. The calculator will show if the EMI is within recommended salary percentage.

5. Frequently Asked Questions (FAQ)

Q1: What is a good EMI to salary ratio?
A: Ideally, your EMI should not exceed 30-40% of your monthly take-home salary to maintain financial stability.

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

Q3: What interest rates can I expect in the Philippines?
A: Motor loan rates typically range from 5% to 15% annually depending on bank, credit score, and loan term.

Q4: Are there other charges besides interest?
A: Yes, there may be processing fees, insurance, and other charges. Check with your lender for complete costs.

Q5: Can I prepay my loan?
A: Most banks allow prepayment but may charge a fee. Early repayment can save you significant interest.