class for carloan :

package carloanapp;

import java.io.FileWriter;
import java.io.IOException;

public class CarLoan {
    Customer gObjCustomer = null;
    double gDbRequestedLoanAmount = 0;
    double gDbInterestRate = 0;
    String gStrLoanRiskLevel = null;


String CalculateRiskLevel(Customer lObjCustomer, int lIntTenure, Double lDbAmountRequested){
    double lDbEMI;
    double lDbSalary;
    double lDbTotalLoanAmount;
    String lStrRiskLevel = null;

    lDbSalary = lObjCustomer.getgDbAnnualIncome() / 12;
    lDbTotalLoanAmount = lObjCustomer.getgDbTotalExistingLoanAmount() + lDbAmountRequested;
    lDbEMI = lDbTotalLoanAmount / ( lIntTenure * 12 );
    if(lObjCustomer.getgStrCreditLevel().equals("good")){
        if(lDbEMI <= lDbSalary * 40 / 100){
            lStrRiskLevel = "low";
        }else if(lDbSalary * 40 / 100 < lDbEMI && lDbEMI <= lDbSalary * 80 / 100){
            lStrRiskLevel = "medium";
        }else{
            lStrRiskLevel = "high";
        }
    }else if(lObjCustomer.getgStrCreditLevel().equals("normal")){
        if(lDbEMI <= lDbSalary * 30 / 100){
            lStrRiskLevel = "low";
        }else if(lDbSalary * 30 / 100 < lDbEMI && lDbEMI <= lDbSalary * 70 / 100){
            lStrRiskLevel = "medium";
        }else{
            lStrRiskLevel = "high";
        }
    }else if(lObjCustomer.getgStrCreditLevel().equals("bad")){
        if(lDbEMI <= lDbSalary * 20 / 100){
            lStrRiskLevel = "low";
        }else if(lDbSalary * 20 / 100 < lDbEMI && lDbEMI <= lDbSalary * 60 / 100){
            lStrRiskLevel = "medium";
        }else{
            lStrRiskLevel = "high";
        }
    }
    return lStrRiskLevel;
}

double CalculateInterest(String lStrCreditLevel, String lStrRiskLevel){
    double lDbInterestRate=0;
    if (lStrCreditLevel.equals("good") && lStrRiskLevel.equals("high")){
        lDbInterestRate=11;
    }
    else if(lStrCreditLevel.equals("good") && lStrRiskLevel.equals("medium")){
        lDbInterestRate=10;
    }
    else if(lStrCreditLevel.equals("good") && lStrRiskLevel.equals("low")){
        lDbInterestRate=9;
    }
    else if(lStrCreditLevel.equals("normal") && lStrRiskLevel.equals("high")){
        lDbInterestRate=12;
    }
    else if(lStrCreditLevel.equals("normal") && lStrRiskLevel.equals("medium")){
        lDbInterestRate=11;
    }
    else if(lStrCreditLevel.equals("normal") && lStrRiskLevel.equals("low")){
        lDbInterestRate=10;
    }
    else if(lStrCreditLevel.equals("bad") && lStrRiskLevel.equals("high")){
        lDbInterestRate=13;
    }
    else if(lStrCreditLevel.equals("bad") && lStrRiskLevel.equals("medium")){
        lDbInterestRate=12;
    }else if(lStrCreditLevel.equals("bad") && lStrRiskLevel.equals("low")){
        lDbInterestRate=11;
    }


    return lDbInterestRate;
}

 void updateCustomerRecord(Customer lObjCustomer,double lDbRequestedLoan){
     try{
        String filename= "Customers.txt";  
        FileWriter fw = new FileWriter(filename,true); //the true will append the new data   
        fw.write("\r\n"+lObjCustomer.getgIntCustomerId()+","+lObjCustomer.getgStrCustomerName()+","+lObjCustomer.getgStrCreditLevel()+","+lDbRequestedLoan);//appends the string to the file  
        fw.close(); 
     }
     catch(IOException ioe) {  
            System.err.println("IOException: " + ioe.getMessage()); 
           } 
 }

 boolean isAccepted(String lStrLoanRisk){
     boolean lBooLoanAccepted=true;
     if(lStrLoanRisk.equals("high")){
         lBooLoanAccepted=false;
     }
     return lBooLoanAccepted;
 }
}

class for CarLoanApp :

package carloanapp;
import java.io.BufferedReader;
import java.io.DataInputStream;
import java.io.FileInputStream;
import java.io.InputStreamReader;
import java.util.Scanner;


public class CarLoanApp {

public static void main(String args[]){
    double lDbLoanAmountRequested = 0;
    int lIntTenure = 0;
    CarLoan lObjCarLoan=new CarLoan();

    Scanner in = new Scanner(System.in);
    System.out.println("Enter the CustomerId ");
    int lIntCustomerId=Integer.parseInt(in.nextLine());

    System.out.println("Enter the Annual Income");
    double lDbAnnualIncome=Double.parseDouble(in.nextLine());

    Customer lObjCustomer =  retrieveCustomerFromFile(lIntCustomerId, lDbAnnualIncome);
    if(lObjCustomer==null){
        System.out.println("Customer doesnt exist ");
    }
    else{
        System.out.println("Enter the loan amount");
        lDbLoanAmountRequested = Double.parseDouble(in.nextLine());
        System.out.println("Enter the tenure");
        lIntTenure = Integer.parseInt(in.nextLine());
        String lStrRiskLevel = lObjCarLoan.CalculateRiskLevel(lObjCustomer, lIntTenure, lDbLoanAmountRequested);
        boolean lBooLoanStatusAccepted = lObjCarLoan.isAccepted(lStrRiskLevel);
        if(lBooLoanStatusAccepted){
            double lDbInterestRate = lObjCarLoan.CalculateInterest(lObjCustomer.getgStrCreditLevel(), lStrRiskLevel);
            System.out.println("Loan Accepted\nInterest Rate : "+ lDbInterestRate);
            lObjCarLoan.updateCustomerRecord(lObjCustomer, lDbLoanAmountRequested);
        }else{
            System.out.println("loan rejected: ");
        }
    }


//      System.out.println(lObjCustomer.getgDbAnnualIncome());
//      System.out.println(lObjCustomer.getgDbTotalExistingLoanAmount());
//      System.out.println(lObjCustomer.getgIntCustomerId());
//      System.out.println(lObjCustomer.getgStrCreditLevel());

}

static Customer retrieveCustomerFromFile(int CustomerId, double AnnualIncome){
    Customer lObjCustomer = new Customer();
    int lIntCustomerId = 0;
    String lStrCustomerName = null;
    String lStrCreditLevel = null;
    double lDbAnnualIncome = 0;
    double lDbTotalExistingLoanAmount = 0;
    boolean lBooCustomerFound = false;
    try{
        // Open the file that is the first 
        // command line parameter
        FileInputStream fstream = new FileInputStream("Customers.txt");
        // Get the object of DataInputStream
        DataInputStream inp = new DataInputStream(fstream);
        BufferedReader br = new BufferedReader(new InputStreamReader(inp));
        String strLine;
        //Read File Line By Line
        while ((strLine = br.readLine()) != null)   {
            // Print the content on the console

            int commaLocation = strLine.indexOf(',');
            lIntCustomerId = Integer.parseInt(strLine.substring(0, commaLocation));
            if(lIntCustomerId == CustomerId){
                lBooCustomerFound = true;
                int nextCommaLocation = strLine.indexOf(',', commaLocation + 1);
                lStrCustomerName = strLine.substring(commaLocation + 1, nextCommaLocation);
                commaLocation = nextCommaLocation; 
                nextCommaLocation = strLine.indexOf(',', commaLocation + 1);
                lStrCreditLevel = strLine.substring(commaLocation + 1, nextCommaLocation);
                commaLocation = nextCommaLocation; 
                nextCommaLocation = strLine.length();
                lDbTotalExistingLoanAmount +=  Double.parseDouble(strLine.substring(commaLocation + 1, nextCommaLocation));

            }

        }
        if(lBooCustomerFound){
            lObjCustomer.setgDbAnnualIncome(AnnualIncome);
            lObjCustomer.setgDbTotalExistingLoanAmount(lDbTotalExistingLoanAmount);
            lObjCustomer.setgIntCustomerId(lIntCustomerId);
            lObjCustomer.setgStrCreditLevel(lStrCreditLevel);
            lObjCustomer.setgStrCustomerName(lStrCustomerName);

        }else{
            lObjCustomer=null;
        }

        inp.close();
    }catch (Exception e){//Catch exception if any
        System.err.println("Error: " + e.getMessage());
    }
    return lObjCustomer;
}


}

class for Customer :

package carloanapp;

import java.io.BufferedReader;
import java.io.DataInputStream;
import java.io.FileInputStream;
import java.io.IOException;
import java.io.InputStreamReader;

public class Customer {

private int gIntCustomerId;
private String gStrCustomerName;
private String gStrCreditLevel;
private  double gDbAnnualIncome;
private double gDbTotalExistingLoanAmount;

public Customer(){

}
public int getgIntCustomerId() {
    return gIntCustomerId;
}
public void setgIntCustomerId(int gIntCustomerId) {
    this.gIntCustomerId = gIntCustomerId;
}
public String getgStrCustomerName() {
    return gStrCustomerName;
}
public void setgStrCustomerName(String gStrCustomerName) {
    this.gStrCustomerName = gStrCustomerName;
}
public String getgStrCreditLevel() {
    return gStrCreditLevel;
}
public void setgStrCreditLevel(String gStrCreditLevel) {
    this.gStrCreditLevel = gStrCreditLevel;
}
public double getgDbAnnualIncome() {
    return gDbAnnualIncome;
}
public void setgDbAnnualIncome(double gDbAnnualIncome) {
    this.gDbAnnualIncome = gDbAnnualIncome;
}
public double getgDbTotalExistingLoanAmount() {
    return gDbTotalExistingLoanAmount;
}
public void setgDbTotalExistingLoanAmount(double gDbTotalExistingLoanAmount) {
    this.gDbTotalExistingLoanAmount = gDbTotalExistingLoanAmount;
}


}

The best way to calculate loan and EMI are on the basis of the mathematical formula:

[P x R x (1+R)^N]/[(1+R)^N-1

where P stands for the loan amount or principal,

R is the interest rate per month [if the interest rate per annum is 11%, then the rate of interest will be 11/(12 x 100)],

and N is the number of monthly installments.

Source: http://www.emicalculators.in