1. What is EMI Calculation?

EMI (Equated Monthly Installment) is the fixed payment amount a borrower pays to a lender each month for a motor trade loan. It includes both principal and interest components, calculated to ensure the loan is paid off in full over the specified term.

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 would pay off the loan with interest over the specified term.

3. Importance of EMI Calculation

Details: Understanding your EMI helps in financial planning for motor trade businesses in the Philippines, ensuring loan payments fit within your monthly budget.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What is a typical interest rate for motor trade loans in PH?
A: Rates typically range from 6% to 20% annually depending on the lender, loan term, and borrower's creditworthiness.

Q2: Are there other fees besides interest?
A: Yes, many loans include processing fees (1-3% of loan amount), insurance, and possibly prepayment penalties.

Q3: Can I prepay my motor trade loan?
A: Most lenders allow prepayment but may charge a penalty fee (usually 2-5% of outstanding amount).

Q4: How does loan term affect my payments?
A: Longer terms reduce EMI but increase total interest paid. Shorter terms mean higher EMI but lower total cost.

Q5: What documents are needed for motor trade loans?
A: Typically requires business permits, financial statements, collateral details, and personal identification.