₹
Don't have an account?
Login to EaseMyDeal
| Month | EMI (₹) | Principal Paid (₹) | Interest Paid (₹) | Remaining Balance (₹) |
|---|
These days, buying a new car is simple because there are numerous car loan options available from different lenders. Typically, an automobile loan is structured as an installment loan, with the vehicle being pledged as collateral. Car loans with appealing interest rates are available from banks and other financial institutions, with a maximum payback duration of 7-8 years.
The best thing is that you can easily calculate Equated Monthly Instalments (EMIs) for auto loans thanks to the car loan EMI calculator available on many bank and third-party websites. Stable Money's vehicle loan EMI calculator is free and simple to use, requiring only a few basic inputs for EMI calculation.
A vehicle loan Based on the data the user enters, the EMI calculator determines the amount of interest that must be paid on a vehicle loan. To find out how much the borrower will have to pay in interest, the tool requires basic information like the interest rate, loan amount, and repayment period.
The interest rate is given by the lender as a percentage of the loan amount. The time frame designated or selected for repaying the auto loan with interest is known as the payback term. A vehicle loan EMI calculator not only calculates the EMI amount but also breaks down the interest and principle amount owed, calculating the entire cost of borrowing.
It can be difficult to manually calculate auto loan EMI using a complicated mathematical technique. Conversely, the EMI amount can be obtained in a matter of minutes using a vehicle loan EMI calculator.
You can also benefit from using an auto loan EMI calculator in the following ways:
The EMI on a vehicle loan is computed using the following mathematical formula:
EMI = P x R x (1+R) ^T/ [(1+R) ^T-1] Here,
For illustration, suppose you take out a car loan for Rs. 8 lakhs (P) with a 10% annual percentage rate (R) for a total duration of 6 years (72 months) (T). Your EMI amount, calculated using the technique above, is Rs. 14,821.
At the conclusion of the payback period, the entire sum owed is equal to Rs. 10,67,112 (or Rs. 14,821 x 72). Of this, Rs. 2,67,112 in interest is due.
There are two sorts of interest rates for auto loans: fixed rates and fluctuating rates. Throughout the loan payback period, the fixed rate doesn't change, but the floating rate could occasionally fluctuate due to changes in the financial market.
Whichever of them you choose, interest rates will vary from loan to lender. Let's look at an example to better grasp the differences between these rates.
For the duration of the loan payback period, the EMI payable is fixed at the interest rate. This occurs as a result of the lender providing a fixed interest rate for the duration of the loan.
For instance, the monthly installment payments (EMI) for a car loan of Rs. 6 lakhs with a two-year repayment period and an interest rate of 8% p.a. would be Rs. 27,136. This sum is what will be owed during the course of the loan repayment.
The amount of EMI you are required to pay under a floating interest rate varies based on the interest rate in effect at the time. The market lending rate that is in effect at any one time determines the interest rate.
For illustration, suppose you take out a two-year, Rs. 6 lakh automobile loan. For the first year, there will be an interest rate of 8%. Thus, like per the case above, the amount of EMI payable will be Rs. 27,136. There would be an unpaid amount of Rs. 3,11,954 after the first year. The auto loan's interest rate is then adjusted to 12% at that point. Additionally, Rs. 27,717 will be the EMI amount due for the remaining term.
The interest rate on auto loans is influenced by a number of factors. Let's examine them now.
One factor that significantly affects the interest rate on a car loan is the age of the vehicle. The loan rates will be greater if the vehicle is used. Conversely, the financing rates will be comparatively cheaper if the car is brand-new.
The interest rate increases with the age of the car.
A person's creditworthiness is shown by their credit score, which is a three-digit figure. The score is between 300 and 900; the closer the score is to 900, the higher the score.
Any financial institution will readily approve a loan application from a person with a score of 750 or higher.
When determining the interest rate for vehicle loan applications, most lenders take credit scores into account. Applications with higher scores are required to pay reduced interest rates, but those with lower scores are subject to higher interest rates.
Therefore, people should work to raise their credit scores as doing so will help them when applying for auto loans.
The ability of a person to manage debt repayments is gauged by their debt-to-income ratio. Financial firms assess how much additional debt an applicant's financial situation can handle with the use of this ratio.
Applicants with lower debt-to-income ratios are given priority by lenders. These people also benefit from reduced interest rates that are applicable to auto loans.
Interest and principal are the two components of an auto loan EMI. The EMI amount is broken out in the amortisation schedule. It displays the amount that is charged as interest and the amount that goes toward paying the principal.
Put differently, an amortization schedule is a monthly loan payment schedule that shows the principal and interest amount for each installment until the vehicle loan is paid off in full. Although the periodic payment is set, its constituent parts change over time.
Throughout the course of the loan repayment period, the interest and principal components will, respectively, reduce and increase accordingly.
As long as you enter the information into the online car loan EMI calculator carefully, it's easy to use. Remember that the loan amount can be substantial—it's typically expressed in lakhs—so when inputting the information, pay close attention to the details.
Two crucial figures are the loan amount and the term. The EMI increases as the loan amount climbs. Additionally, the EMI increases with a shorter term and vice versa. You can adjust these values to obtain a useful amount.
Below is a step-by-step tutorial on how to use an online car loan EMI calculator:
The annual interest and principle amount due, as well as the remaining balance at the end of each year, are provided by the vehicle loan EMI calculator.
When you take out a car loan, you get a set quantity of money over a predetermined length of time at a predetermined interest rate. If you choose to pay off the entire amount of your loan at one time throughout the repayment term, this is known as prepayment of your auto loan.
You might be wondering why using an online car loan EMI calculator is necessary when the lender handles all of the computations.
First off, a number of lenders for auto loans are available on the market, and their rates are competitive. With the help of several lenders' auto loan calculators, you can choose the best offer. A car loan EMI calculator's primary benefit is that it helps you determine your expectations for auto financing before you even start the application process.
Interest rates offered by different loan providers can vary significantly. Although you are unable to change a specific lender's interest rate, you are able to select the lender offering the best rate.
In conclusion, an auto loan EMI calculator is a very helpful tool for all potential borrowers. A car loan EMI calculator will assist you with everything from anticipating your EMI to comparing the EMIs of different car models and brands.
You may get the finest deal at the lowest interest rate and have the upper hand over the lender by using the calculator.
Thus, the first thing you should do if you intend to buy a car on credit is to use the various lenders' auto loan EMI calculators. When you use these calculators, you'll see how helpful they can be in giving you the information you need to buy a car.