Searching for a car and not shopping for the attractive interest rates will put your financials in tatters. The rates form the base on which the repayment of a loan hinges greatly. While searching for a car loan lender, you can’t take your eyes off from Axis Bank, the third largest private lender with more than 3,000 branches and 12,000 ATMs across India. The bank provides loan for a variety of cars from passenger cars to sports utility vehicles (SUVs) at an interest rate of 11%-12% per annum for a maximum period of 7 years. How will Axis Bank Car Loan Interest Rate affect your month-on-month budget? The answer is right below for you to glance at.
Take Note of Axis Bank Car Loan EMI Calculator
The impact of interest rate can be best visualized through the EMI calculator, which many address as interest calculator. The car loan calculator functions based on three factors-loan amount, interest rate and tenure. Keeping loan amount and tenure constant, it’s the interest rate that can either make or break the game. The lower interest rate will bring down the amount of EMI and interest to be paid over the course of the loan and vice-versa. Let’s take a look at an example below showing the difference that the interest rate can bring to one’s repayment future.
Example-Shivam Gupta applied for a 7-year car loan of ₹5 lakhs at Axis Bank. Based on his strong financials and the credit history, the bank lent him at the rate of 11%. While his friend Manpreet Walia got the same amount of loan for 7 years. The bank, however, disbursed him the loan at 12% interest rate. While Shivam would have to pay an EMI of ₹8,561 and interest of ₹2,19,142, Manpreet’s liability for EMI and interest would be ₹8,826 and ₹2,41,415, respectively. A difference of 1% interest rate draws out ₹22,273 more from the pocket of Manpreet over the course of 7 years.
You can look at the below formula to calculate the applicable EMI on the loan you avail from Axis Bank
EMI=[P x R x (1+R)^N]/[(1+R)^N-1],
Where P= Principal Loan Amount
R=Interest Rate
N=Number of Monthly Installments
If you carefully study the impact of interest rate, you would find a longer loan tenure empties your pocket more and fills the bank’s coffers more. You would ask, how? My reply would be through an example, just to let you understand it better.
Example- A ₹5 lakh car loan at Axis Bank’s interest rate of 11%-12% for 7 years puts forth an EMI and interest of ₹8,561-8,826 and ₹2,19,142-2,41,415 to be paid over the course of the loan. Whereas, on a 5-year tenure, the same loan will have the EMI and interest repayment of ₹10,871-11,122 and ₹1,52,273-1,67,333 to be paid. Yes, the EMI does shot up by ₹2,310-2,296 with a 5-year loan. But you happen to save an interest outgo of ₹66,869-74,082 by availing the shorter tenure.
Axis Bank Car Loan Amortization Calculator
With the help of the Axis Bank Car Loan Amortization Calculator, you can get to see the repayment in both principal and interest portions each year until the expiry of the loan. Also, you can check the outstanding balance of the loan each year. This will let you know exactly the amount of repayment that you would need to do from your end.
Although Axis Bank Car Loan Interest Rate is in the double digit, a careful planning from the borrower’s end can save quite a few bucks towards the repayment. Do take this article as a guide and plan your car purchase via Axis Bank.
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