Looking for a calculator that can calculate your car loan EMI? This is pretty important, particularly when you have to work out the approximate/estimated EMI payable on your car loan. A vital step to take when you are thinking of applying for a car loan is to calculate car loan EMI online. This will give you a basic idea of what to expect in terms of your monthly repayment after the car loan starts. Nowadays, car loans are the best outlets for the salaried and professional classes to purchase cars of their choice. These are secured loans, i.e. the car or asset is what guarantees the loan and are easier to obtain in comparison to home or business loans.
Car loans involve a down payment portion, i.e. the amount which you will be paying from your own pocket while the rest of the car value is financed by the bank or financial institution. Some lenders also offer zero down payment loan options. The tenures for car loans are usually on the shorter side, i.e. between 3-5 years on an average although this can go up to 7 years as well. However, keep in mind that the longer your tenure, the more interest that you have to pay to the lender. At the same time, a shorter tenure will equate to a higher EMI amount which may be hard for you to afford. Hence, achieving a fine balance between the two factors is recommended before you buy your desired car.
Learning how to calculate EMI on car loans
Thinking of how to calculate EMI on car loan? You can easily work out the EMI amount by using the below mentioned formula:
EMI Amount = [P x R x (1+R)^N]/[(1+R)^N-1]
Here, P, R and N are variable factors. P is the principal amount of the loan given to you by the lender, on which the interest will be worked out and R is the rate of interest that is fixed by the bank/lender. At the same time, N equates to the number of years of the loan or the tenure of the loan. Since you pay your EMIs on a monthly basis, the tenure is worked out through the number of months in most cases.
Suppose you have applied for a car loan of Rs. 10 lakh. You can use the above-mentioned formula for calculation or simply use an online car loan EMI calculator instead. Calculate car loan EMI easily for this amount for a tenure of 3 years or 36 months with a rate of interest of 12% (all approximations). Going by the calculation, your monthly EMI will stand at Rs. 33,214/- per month and the total interest that is payable will stand at Rs. 1,95,715/- The overall outgo for you, including the principal amount will be Rs. 11,95,715/-
How to use the car loan EMI calculator
Using the car loan EMI calculator actually involves a really simple process. You have to use the sliders given for choosing the amount of the loan, the tenure of the loan in months and of course, the rate of interest at the lender in question. You can always re-calculate by changing these values anytime you wish.
The EMI will be instantly calculated once you move the given sliders or input the figures. You can easily calculate the car loan EMI in a matter of seconds or minutes. This will help you understand the monthly financial outgo before you finalize your vehicle purchase.
Factors that may impact your car loan EMI
Before delving deeper into using the car loan EMI calculator, you should learn about the factors which may affect the car loan EMI in the first place. These include the following:
- Category of Applicant, i.e. whether you are salaried, self-employed, a professional (self-employed), into business or whether you are a man/woman borrower.
- Age Group as per lender criteria.
- Tenure of the car loan
- Specific car loan scheme that you are applying under
- Whether you are buying a used/new car
- Rate of interest as specified by the lender
- Your credit score (a better score may help you get a lower rate of interest)
- Whether you are making any down payment or not
- The final loan amount
- Whether you have an existing account with the bank/financial institution in question.
Using the car loan EMI calculator online will help you instantly calculate the monthly amount that is payable, without any hassles. You only have to input the desired values or move the sliders and you can instantly see the entire loan outgo, what you have to pay every month and so on. This will help you plan your finances better before you apply for a car loan. If you have a good credit score and track record of paying off debts in a timely manner without defaults, then you can expect a comparatively lower rate of interest from your lender. You should understand that rate of interest is not the sole deciding factor for working out the overall interest paid on the car loan. Hence, the duration should also be considered, as mentioned before. The longer your duration, the higher your interest outgo and this is something you should be aware of.
On a closing note
Getting your first car is indeed a beautiful feeling. EMI has been proved to be very helpful for people who cannot afford it in one go. However, before that you need to ascertain the EMI scheme is in line with your budget; people nowadays start saving money through various methods of investing which can also help you to keep up with the rising inflation. You can compare prevailing car loan interest rates online across multiple lenders and platforms to get the approx budget. Comparing rates and other terms is always a good idea before applying. On an average, financial institutions offer car loans at rates of interest hovering between 8.35-12% on an average. There are often processing fees and other charges to be paid on the loan as well. When financial institutions launch special car loan schemes or offers, they may offer concessional interest along with waivers on the processing fees and other costs.