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over 1 year ago

How is car loan caculated

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John

Hi Vincent, thanks for leaving a question. Typically, an interested buyer is only able to get a 60 or 70% car loan from the bank, depending on the Open Market Value (OMV) of the vehicle. If the OMV is below $20,000, you'll be able to get a 70% loan. If it is above $20,000, you can only get a 60% loan.

Let's say you purchase a $100,000 car with an OMV of $19,000. You will receive a bank loan of $70,000. The remaining $30,000 will have to be paid by cash. Most banks offer an interest rate of 2.78% p.a and the maximum loan tenure is at 7 years.

Here's the formula to calculate the interest base on the information above:

Interest = $70,000 x 2.78% x 7 years = $13,622

Therefore, your total repayment amount is $70,000 + $13,622 = $83,622. Your monthly instalment will be $83,6227 / 84 months (7 years) = $995.50.

Kindly note that this is the maximum amount that the bank will loan you. The actual loan amount might be smaller, depending on your monthly income, financial commitments and credit score.

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over 1 year ago