Auto Loan EMI Calculator

What is an Auto Loan EMI Calculator?

An Auto Loan EMI (Equated Monthly Installment) Calculator is a financial tool that helps borrowers estimate their monthly car loan payments. It takes into account the loan amount, interest rate, and loan term to calculate the fixed monthly payment required to fully amortize a loan by maturity.

Formula for Auto Loan EMI Calculation

The formula for calculating the EMI on an auto loan is:

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

Where:

• EMI = Equated Monthly Installment
• P = Principal Loan Amount
• r = Monthly Interest Rate (Annual Rate / 12)
• n = Total Number of Monthly Payments (Loan Term in Months)

Calculation Steps

1. Calculate the monthly interest rate by dividing the annual rate by 12.
2. Apply the EMI formula using the loan amount, monthly rate, and total number of payments.
3. Calculate the total interest paid by multiplying the EMI by the number of payments and subtracting the original loan amount.

Example

Let's consider a scenario with the following details:

• Loan Amount: $25,000
• Interest Rate: 5% per year
• Loan Term: 60 months (5 years)

Calculation:

1. Monthly interest rate: 5% / 12 = 0.4167%
2. EMI: $471.78
3. Total interest paid: $3,306.80

In this example, the borrower would pay $471.78 monthly. Over the 5-year term, they would pay a total of $28,306.80, of which $3,306.80 is interest.