Cars have seen a growing demand in the past few decades with them being more of a necessity than a luxury. Be it a metro city or a small town, they are indispensable for commuting to your destinations. With the increase in the standard of living, there is an increasing demand for all types of cars ranging from hatchback, SUVs, MUVs and sedans. Cars can be a utility for some whereas passion for many.
Not everyone has sufficient funds to buy their dream car. Some even consider it as blocking a large pool of financial resources in a depreciable asset. The same money can be used elsewhere otherwise. This makes car loan a popular choice among the auto enthusiast community.
Car loans are to be repaid in periodic instalments called as the equated monthly instalments or EMIs. These EMIs are equally spread out among a predetermined tenure. The EMI consists of the principal and interest component of the loan. Each financial institution has different car loan interest rates. You can use a car loan EMI calculator to determine the amount of EMI that you’ll be required to shell out each month.
The EMI is a fixed amount but the ratio of interest and principal repayment in each instalment differs. During the initial periods, the interest forms the major component of your EMIs whereas gradually principal takes over.
Let us look at how car loan EMI calculator works –
Car loan EMI calculator requires certain inputs from the user on the following parameters-
Car Loan Amount : The amount the borrower would like to avail from the lender.
Car Loan Tenure : The duration within which the entire amount due needs to be repaid.
Car Loan Interest Rates : The rate of interest that is charged by the lender on the loan amount.
Processing Fee : Some lenders charge a nominal processing fee at the time of disbursal of your loan.
On providing the above parameters, the EMI calculator renders the exact amount of interest and principal to be paid in each instalment of your car loan.
The EMI isn’t the only charges related to a car loan, but charges like processing fees, documentation charges, loan cancellation/rebooking charges, pre-payment charges are some more that you need to keep in mind. Comparing EMI across different lenders will help in finding the cheapest car loan interest rates. Using a car loan EMI calculator makes this task simple and convenient for you.