Car loan EMI calculator
With the burgeoning economy and growing per capita income, the desire of owning a car is rampantly changing into demand. Thanks to the presence of a number of car makers in India, we have a surfeit of option to choose from. However, when it comes to buying a car, the affordability is largely met by car loans. As it is difficult to pay a chunk at once, banks play a crucial role in the purchase of your desired car. A loan helps you to finance the purchase of your car when there are insufficient monetary resources available at your disposal.
Availing a loan is one thing, which depends on your credit score and financial health. Whereas, reimbursement of the same is a lengthy process, in which the loan is amortized with monthly installments known as Equated Monthly Instalment or EMI. A borrower can have prior knowledge of the EMI amount by using the Car loan EMI calculator. There are a number of websites that offer online car loan EMI calculators or one can do the calculations manually. This helps you to plan your finances in a better way so that you won’t suffer bankruptcy during the repay period.
How to calculate
Generally, car loan EMI calculation is done online, thanks to the presence of numerous online calculation services. However, if one doesn’t have access to the internet, then also he/she can calculate car loan EMI manually. Let us have a brief look at how the two method works.
Online EMI calculators: Internet is flooded with websites of banks operating in India. Not only this, but there are also a plethora of websites offering financial knowledge for free. These portals also have online EMI calculators where one can have an idea of the amount of EMI, which he/she will have to pay after availing a car loan. The calculators ask for three inputs, namely loan amount, interest rate and the number of periods (reimbursement). The results are displayed instantly on the same page. Moreover, one can also adjust the inputs in order to know the variants of EMI with different interest rates and tenures.
Manual calculation: This is the basic method of EMI calculation, where one needs to employ a mathematical formula. Just like the online calculation method, this formula also requires the same three inputs i.e; loan amount, rate of interest and number of periods. The results will be similar to those obtained using online calculators.
The online Car loan EMI calculators do not ask for any formula in order to display the results. However, the formula is pre-embedded in it and since it’s a digital process, the results are rendered instantly.
The formula used: E = P*r*(1+r)^n/((1+r)^n-1)
Where E is the EMI
- P stand for the principal loan amount
- r is the rate of interest and
- n is the number of periods.
On the other hand, calculating car loan EMI manually requires a mathematical formula and also the necessary calculations (if not using a calculator).
Formula used: EMI = [P x R x (1+R)^N]/[(1+R)^N-1], where
- P is the principal amount
- R stands for rate of interest, and
- N denotes the number of periods.
Benefits of car loan EMI calculator:
Using a car loan EMI calculator is one of the ways of getting the figures, which you would be paying in the coming days (after availing the loan). It is better to proceed with caution instead of falling into a debt trap and at last, in financial bankruptcy. A car loan EMI calculator helps you in the following ways:
- Having prior knowledge of car loan EMI before the disbursal of loan is always beneficial. It helps you to plan your finance and offers you the opportunity for pre-budgeting.
- You can check the affordability of the car loan from a particular company and can compare all of them simultaneously. This saves you from unnecessary cozen and helps you avail the scheme that matches your preferences.
- Some of the online EMI calculators also show each and every segment of the reimbursement amount. Thye present a chart that shows disparate columns of principal EMI amount and interest charged. Also, you can have a detailed knowledge of the opening and closing balances of each year.