In the advent of many cars hitting the roads each year, the desire to bring home the all-new car model gets stronger than ever before. Says thanks to the customization or something else, in today’s times there are a large group of lenders up and ready to finance your car dream. But when the talk of car loan does the round, the focus automatically shifts to the repayment, which can be made in equated monthly installments (EMIs).
You must have heard this abbreviated term, right! What is the definition of EMI and its impact on your pocket? This is something you need to check out before you apply for car loan. And you can do so with the help of a car loan calculator which does all the calculation with regards to the repayment. Just as you make a lot of calculations regarding your month-on-month expenditure to save for the future, similarly you would need to understand the function of the calculator deeply to enjoy a bumpy-free ride on the road. So, let’s choose this moment for a full disclosure on the car loan calculator.
Types & Dimensions of Car Loan Calculator
Doesn’t matter if you want to apply for car loan online or offline, you need to be proactive to understand out each and every aspect related to the loan. It could be either your loan eligibility, EMI, repayment schedule, etc. Based on these variables, you would need to use different calculators. Let’s go one-by-one and explore their functions in detail.
Car Loan Eligibility Calculator
Before applying for a car loan, you should know the expected amount of loan disbursal to get a clear idea of whether you can bring home your dream car or not. So, how will you ascertain that? Any idea? Don’t know? Start using the car loan eligibility calculator that functions on the basis of the age, income, saving and the repayment capability of a borrower. It won’t be wrong to say that people with more years left before they would hang their boots from the professional stand a great chance to receive a higher amount of loan to buy their dream car. But factors like income and saving can play the spoilsport if they are not adequate enough to facilitate the smooth repayment of the EMIs. There is a formula that the banks use to compute the loan amount. You can also use the same and know the magical figure beforehand.
Car Loan Eligibility- ₹1,00,000 x savings/per lakh EMI
Let’s assume you are an engineer at a multinational company on a net monthly salary of ₹45,000. The monthly savings stand at around ₹18,000. How much can you expect to receive as a car loan? In the above formula, you could see per lakh EMI which can be calculated based on the existing interest rate and the maximum repayment tenure. Just in case you are looking to apply for a car loan at SBI, the interest rate applicable will be 9.20%-9.25% per annum. The bank offers the loan for a maximum period of 7 years. So, the per lakh EMI in your case would be ₹1,619-1,622. Now I guess, we have all the variables to place in the formula and find the desired result.
Car Loan Eligibility-₹1,00,00x18,000/1,619= ₹ 11.11 lakh (Approx.)
-₹1,00,00x18,000/1,622= ₹ 11.09 lakh (Approx.)
A car loan of 11.09 lakh-11.11 lakh awaits. Check out whether the loan eligibility is sufficient to buy the car you want to.
Car Loan EMI Calculator
Next, comes the EMI calculator that shows the monthly repayments to be made with respect to a car loan. The EMI constitutes both principal and interest portion to be repaid each month. The repayment of interest portion will be more compared to the principal part in the initial years of the car loan. However, as the loan is a year or two away from completion, the principal part would become heavier.
Also, the EMI calculator works on the basis of the principal loan amount, the interest rate charged and the tenure of the loan. Definitely, when the interest rate is more, the repayment will be more and can pinch your pocket dearly and vice-versa. You can be slightly wiser in opting a tenure. Many carry the belief that choosing a longer tenure is the best exercise to lower the EMI. But they do not understand the implication of interest repayment on their pocket and thus end up paying an excessive amount which otherwise could have avoided with a shorter tenure.
Example-If you are applying for a 7-year car loan of 8 lakhs at SBI, which as stated earlier has an interest rate of 9.20%-9.25% per annum. In that case, the EMI, interest and overall repayment are expected to be ₹12,953-12,973, ₹2,88,019-2,89,731 and ₹10,88,019-10,89,731, respectively.
If you shorten the tenure to say 5 years, then the EMI, interest and overall payout are estimated to be ₹16,684-16,704, ₹2,01,067-2,02,235 and ₹10,01,067-10,02,235, respectively. See the difference. You can save an interest of ₹86,952-87,496 from your pocket by paying an excess EMI of ₹3,731.
Car Loan Amortization Calculator
Get a full detail of the car loan repayment track with the help of an amortization calculator. It shows the year-on-year repayments with respect to principal and interest. Additionally, the outstanding balance at the end of each year is also shown in the calculator.
So, all you car aficionados use car loan calculator to save your hard-earned money. Else, you would keep on experiencing the bumps on the road with the pocket getting thinner and thinner as your car loan journey moves ahead.
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