How is a Car EMI Calculated Monthly?

Buying a car, whether it’s a brand-new model or a pre-owned car, is expensive. After your property, your car is often the second-largest investment you’ll make. So unless you have the cash in the bank to spare, the most common means of buying a pre-owned car in the UAE is through finance deals.

At Al Futtaim Automall, we specialise in making aspirational cars affordable, so part of our package is a range of finance options that make it much more affordable to buy that dream car. While trading in your old vehicle can knock off quite a large chunk of the cost of a newer model, you may still need to arrange finance to cover the rest of the expense. The most practical and manageable way of doing this is to take out a car loan that's paid back in equal monthly amounts.

What is an EMI?

An EMI stands for Equated Monthly Instalments. which spreads the car amount, including the interest, over a set period. This breaks the amount into monthly payments that are the same each month. As long as you make your payments on time and every month, you generally won't incur any additional charges.

The amount is calculated by taking the amount plus the interest and dividing it over an agreed repayment schedule. These usually vary from 12 to 24 months, although depending on the lender they can be spread over a longer or shorter period.

How do I know how much I’ll have to pay?

Usually, when a vehicle is advertised, both the total amount and potential monthly repayment amounts are listed. However, you will get a full breakdown of your repayment amounts when you discuss the final details with your dealer. At Al Futtaim Automall, we try hard to make it as simple as possible, so you will know exactly how much you have to pay every month.

We also buy pre-owned cars and are happy to talk to you regarding using your old car as part payment against a newer model. That could save you a considerable amount on your finance deal, as well as saving you the hassle of having to sell your old car privately.

What are the advantages of car EMI in the UAE?

The most significant advantage is that you can budget exactly, as you'll know precisely when your monthly repayments are due and how much you'll be paying. This allows you to plan ahead and determine precisely what kind of pre-owned or new car you can afford. It ensures you don't stretch your finances beyond your means and avoid getting into any difficulties further down the road.

What if I miss a payment?

A car finance deal is like any other financial loan, so you are committed to paying the correct amount on the due date. If you miss a payment, then you may incur additional interest charges. Our top tip is to talk to your bank as soon as you suspect you might have trouble meeting a payment, and they'll be able to work with you to resolve the situation.

Isn't it cheaper to pay the total amount in one go?

Arranging finance for a car in the UAE is quick and easy. If you have the funds to pay for your vehicle in full, you may save yourself some money, as all finance deals will charge interest. However, look for special offers with 0% finance for a set period. This will mean that for the first 12 months (for example), you won't pay any additional interest charges at all. If you pay your full balance within that time, you won't pay any more than you would if you bought the vehicle outright.

Find out more

At Al Futtaim Automall, we have a specialist team working to ensure your finance options are the best in the UAE. If you'd like to know more or have any questions about EMI finance deals, don't hesitate to check out our FAQs or contact one of our team today.