Car Loan EMI Calculator
What is Car Loan EMI?
Equated Monthly Installment, commonly known as EMI, is a fixed payment amount owed by a borrower to a lender at a specified date each calendar month. EMIs are used to pay off both interest and principal each month so that over a specified number of years, the loan is paid off in full.
When it comes to buying a car, a car loan EMI is a sum of money that you borrow from a bank or other lending institution to purchase a vehicle. Instead of paying the full amount upfront to the car dealer, you would pay fixed monthly installments to the lending institution, which makes the full payment to the dealer on your behalf.
It's important to understand that these are secured loans, meaning the car stands as collateral until you repay the loan amount and interest.
To calculate the EMI on your car loan, the following key factors come into play:
Loan amount given to you by the bank
Rate of interest set by the bank (calculated monthly)
Duration of the loan (in months)
How to Use a Car Loan EMI Calculator?
The Car Loan EMI Calculator is a handy tool that allows individuals interested in buying a car to know their EMI (equated monthly installment) in advance and plan their budget accordingly. Here's how:
Enter the annual interest rate set by your lending institution. For instance, let's say it's 8.0%.
Input the processing fee charged by the bank. For the sake of this example, let's say it's Rs. 1500.
Upon entering these values, the car loan EMI calculator would give an estimate of your monthly installments. On top of that, it will help you understand the total interest payable and the total payment made during the entire loan duration.
The tool also shows the annual percentage rate (APR). This takes into account the processing fee charged by your bank allowing you to compare the car loan options offered by different banks.
Moreover, you'll get a detailed account of your periodic principal and interest payments. You can see the outstanding amount at any point in time using the amortization schedule and a chart of balances.
An Actual Example to Demonstrate the Calculator
Let's consider the following scenario as an illustrative example of how the EMI Calculator works.
Suppose you plan to buy a Tata Nexon car at an on-road price of about Rs. 8 lakh.
Your bank is ready to finance 100% of the on-road price at an annual interest rate of 8.0% for a tenure of 60 months.
By inputting these details into the Car Loan EMI Calculator, you can quickly calculate your EMI. This tool allows for accurate estimation and comparison to get the best deal on your car financing and maintain your budget for the loan period effectively.