Car Loan EMI Calculator
MoneyView has come up with an easy-to-use EMI calculator. With our
Car Loan EMI Calculator, you can easily find out your EMI as well
as a breakdown of the installments based on different interest rate
slabs, repayment tenure, and the amount borrowed.
How does the Money View Car Loan Calculator Work?
The Money View car loan EMI calculator is designed to be extremely easy to navigate.
Follow the steps below to find out your EMI -
Enter the loan amount that has been borrowed. You can use the slider
to adjust the amount
Next, enter the interest rate that is being charged by using the slider to adjust the number
Lastly, provide the repayment tenure that you wish to choose
And voila! The monthly EMI that you will have to pay will be calculated and displayed for you.
The amount you pay as EMI can significantly determine your financial plan for the future.
Using our car loan EMI calculator, you can easily plan out how much you can save and other finances by knowing how much
EMI you will have to pay. This way your dream of owning a car can also become a reality thanks to proper planning from your side.
Car Loan EMI Calculation Formula
The formula for calculating EMI is as follows:
P x R x (1+R)^N / [(1+R)^N-1]
Where P is the principal amount that you wish to borrow
R represents the rate of interest imposed
N represents the repayment tenure in months
For example, if Rs. 5,00,000 is the amount borrowed (P), 7% is the rate of interest imposed (R),
and the 36 months is the tenure (n), the EMI to be paid using the above formula will be:
5,00,000 x 0.00583 x (1+0.00583)^36 / [(1+0.00583)^36-1] = Rs.15,439 (per month)
The rate of interest (R) is calculated monthly i.e. it is calculated as (Annual Rate of interest/12/100)
in this case (36/12/100 = 0.00583)
Car Loan Amortization Schedule
Now that you have found out your monthly EMI, it is time to understand what your loan repayment schedule is
going to be throughout the entire repayment tenure. Given below is the car loan amortization schedule for the above example.
The EMI being paid every month reduces the principal and interest payments over the duration of the repayment.
For eg., for a principal amount of Rs.5,00,000 with interest rate and repayment tenure being 7% and 3 years respectively,
the EMI amount based on the formula is Rs. 1,85,268 per year or Rs. 15,439 per month.
This EMI amount over time results in a reduced principal and interest amount being paid every year until the loan is fully repaid.
The table below illustrates the amortization schedule of this loan in detail.
Factors Affecting Car Loan Interest Rates
Everyone wants to avail of loans at a low rate of interest but this is dependent on a number of factors.
Given below are key elements that affect car loan interest rates -
If there is one factor that largely determines the interest rate charged on a loan, it is your credit score.
The higher your credit score (above 700), the greater are your chances of availing a loan at low-interest rates.
This is because a high credit score indicates that you are creditworthy and are therefore less likely to default on the loans.
The shorter the repayment tenure, the lower is the interest rate.
However, the amount you pay as EMI will be slightly higher.
Therefore, as an applicant, you must choose a repayment term that is beneficial for you financially and can help you pay off your loan easily.
- Employment Status of the Applicant
Lower the debt to income ratio, better are your chances of availing a low-interest rate loan as you are
less likely to default on payments. This also means that the risk for lenders is low therefore will offer loans that
have competitive interest rates.
If the down payment amount is high, the amount of loan that you wish to avail will be low thereby decreasing the risk of defaulting for lenders.
In such a scenario, as the likelihood of default is less, the loan will be provided at a lower interest rate.
Cars are a necessity in today’s times but are also considered to be depreciating assets as their value reduces over time.
Additionally, car loans are secured loans which means that the vehicle in question will be hypothecated to the bank until the loan has been repaid. The resale value of the car is a deciding factor for the bank when providing loans.
Older and used models are considered to be riskier as their resale value is lower.
Therefore car loans for vehicles that are new can be availed at a relatively lower rate of interest as opposed to older or used cars.