1. What is EMI?

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

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 will completely pay off the loan (principal + interest) over the loan term.

3. Understanding Motor Loans in the Philippines

Details: Motor loans in the Philippines typically have terms ranging from 12 to 60 months, with interest rates varying based on the borrower's credit profile, type of vehicle, and lender policies. Common lenders include banks, financing companies, and in-house financing from dealers.

4. Using the Calculator

Tips: Enter the loan amount in PHP, annual interest rate (common rates range from 5% to 15%), and loan term in months (typically 12-60 months for motor loans).

5. Frequently Asked Questions (FAQ)

Q1: What is a typical interest rate for motor loans in the Philippines?
A: Rates typically range from 5% to 15% annually, depending on the lender, loan term, and borrower's creditworthiness.

Q2: Are there other fees besides interest?
A: Yes, most loans include processing fees (1-5% of loan amount), insurance, and possibly chattel mortgage fees.

Q3: Can I prepay my motor loan?
A: Most lenders allow prepayment but may charge a penalty fee (usually 5-10% of outstanding balance).

Q4: What's the maximum loan term available?
A: For motorcycles, typically up to 36 months; for cars, up to 60 months. Older vehicles may have shorter terms.

Q5: How does a down payment affect my loan?
A: A larger down payment reduces your principal amount, resulting in lower EMIs and total interest paid.