What are the things that come to your mind while you are looking to buy a car on a loan? Is it the interest rate, loan amount, tenure or what? All that are important for a successful car loan journey. Obviously, you should choose a lender offering a car loan at lower interest rates. Currently, car loan interest rates range from 9.35%-13% p.a for new models. While the rates go up to 14%-20% p.a. on older cars. No matter what the interest rates are, your ignorance on the EMI can be a costly mistake and you must avoid the same.
So, how will you resolve the hassle of EMI? Any guesses? Not coming with the answer? It’s the car loan EMI calculator that will fix the problem by computing the monthly installments with ease. Let’s discuss on the same in detail.
Computation of EMI:
EMI constitutes the amount of principal and interest payable towards a car loan. The amount of EMI depends on the loan amount, interest rate, and the tenure of a loan. Higher the interest rates greater will be the amount of EMI and vice-versa. Tenure also plays an instrumental role in either increasing or decreasing the EMI amount. On a shorter tenure, the EMIs are higher compared to a loan with a longer one.
However, the overall interest repayments are lower in the case of a shorter period. So, the decision to opt for a shorter or longer tenure solely rests with your ability to repay the EMIs. If you can afford to pay a higher EMI, better is to opt for a shorter loan tenure to reduce the interest repayments. Else, opt for a longer tenure to go easy on your pocket month-on-month. The maximum tenure for a new car and old car loan is 7 years and 5 years, respectively.
You can calculate the car loan EMI by using the formula below.
EMI= [ P x R X (1 + R) ^ N] / [ (1 + R) ^N – 1]
Where P=Principal Loan Amount
R= Interest Rate
N= Number of Monthly Installments
Suppose a bank is offering you a car loan of ₹ 5 lakhs at an interest rate of 10% p.a. for a period of 7 years. The amount of EMIs and interest repayments will be ₹ 8,301 and ₹ 1,97,250 over the 7-year tenure.
Features & Benefits of Car Loan EMI Calculator:
The function of your friend in car loan EMI calculator is wide ranging from helping you choose the right model to give you the right estimates of monthly installments payable. So, without any delay, let’s run through its features and benefits below.
- The calculator makes it easy for you to compute the installments with a mere entry of loan amount, interest rate and loan tenure.
- Along with the EMI, you can also know the overall interest repayments and the total outgo towards a car loan.
- An amortization schedule is another thing that you can get to see using the calculator. The schedule shows the repayments of principal and interest amounts, along with balance outstanding each year. This will give you an idea of how should you approach for a car loan. Glancing at the schedule, you can decide on three important parameters-loan amount, interest rate and tenure.
- The calculator also allows you to see the impact of prepayments on your loan EMI. You just need to input the amount, frequency & charges of prepayment in the calculator to know the same.
- The EMI calculator can help you budget your monthly expenditure in an effective manner so as to make the installments affordable for you.
- You can save a lot of time using the EMI calculator as the results are instant. With a mere entry of the loan amount, interest rate and tenure, the calculator flashes the desired amounts of EMI, interest and total repayments over the course of a loan tenure.
- Accuracy is synonymous with car loan EMI calculator as it removes the hassles of calculating the installment using the complex mathematical formula. Yes, you can be very good in mathematics. But like many, you can also err being a human.
- Keep changing the values and you will receive the new amounts of EMI and interest. Doing this will help you in comparing different loan offers to choose the best one.
I am sure, you have come to know how critical a car loan EMI calculator can be in your loan journey. So, keep using EMI calculator to save on your car. Hope the information above will enable you to get the keys of your dream car.