Car Loan EMI Calculator Aug, 2018

Planning to buy a car & Take a loan for that. Find out here how much would the EMI be?
Car Loan Amount
No. of Months
Interest Rate
%
Monthly EMI
Total Interest Payable
Total Principal
Total Payment(Principal + Interest)

Introduction

Do you know that you can go for a Car Loan around 48-50 times more than the monthly instalment you can afford to pay. Simply means if you can afford to pay around Rs.20000 in EMIs every month for a Car Loan, you can get Car Loan of Rs.9.5-10 lacs.

What is a Car Loan

Car Loan refers to loan that you take from the Bank for purchasing the car. The Bank hypothecates (yes that’s the word) in their name and give you the loan. The registration certificate mentions Bank’s name. You have to return what you borrow in a particular time period.

Whatever is borrowed is borrowed at a cost. Banks define that time period as TENURE of the loan and it ranges from 3 years till about 7 years. Usually people go for 5 years. Banks charge you some interest. Everybody needs some interest on the money they lend. Even you do. Isn’t it? That interest is dependent on many factors. One of the factors being with which company are you employed with. Which car you are purchasing also decides the interest rate. The Banks tend to prefer the high end cars more than the low end ones.

Why to take a Car Loan:

With 9.5% - 10% interest rate and not enough funds for you to put down as a lumpsum amount for purchasing of car, a car loan will be needed.

So you have some spare funds available every month. You wish to buy a car & also take a low interest car loan. You have come to the right place. First you can see how much EMI you need to pay for a loan that you wish to take. Then you can choose from the best offers available from the site & go for the lowest interest best car finance for your next car purchase.

The need for this Car Loan EMI Calculator

Financial Calculations are not so easy to understand. Even though the EMI Calculator is the most basic one, still it is a struggle sometimes to understand the same. We thought why not make a calculator that helps you easily to determine what you have to pay as car loan EMI every month for a particular loan amount for a particular tenure of car loan. That’s it. The rest is done by the calculator.

How to use this calculator

Just going through the formalities, I will now tell you how to use this auto loan calculator.

CAR LOAN AMOUNT: Put in the amount of Car Loan you are looking to take. Please remember that always take about 95-100% of the ex-showroom price of the car you have in mind. This is what generally Banks lend you.

NO. OF MONTHS: Here you select the tenure of the loan you feel is comfortable for you – 36 months (3 years) or 60 months (5 years). We have put the default value at 5 years which is what mostly the vehicle owners go for whenever they are taking a car loan.

INETREST RATE: Enter here the current offer in the market for the best interest rate. You can check offers on our site to enter the new interest rate. Default value we have put here is 10% which we believe is much closer to the prevailing interest rates in the market.

What you get as an answer is the EMI you will have to pay monthly for the loan. If you would look around slightly on this page, you can find offers on Car Loans. Choose from one of them, get door-step service & save money. Then go on a long drive for a holiday and make your family happy.

Car Loan EMI & working explained in detail

What is an EMI:

Banks have way of calculating how much exactly you have to pay them back. It should be simple for you as well. So they kept it simple. You pay SAME AMOUNT every month so that it is easier for you to follow. This is called EMI – EQUATED MONTHLY INSTALMENT. EQUATED because it is EQUAL/SAME every month. MONTHLY because you have to pay MONTHLY. INSTALMENT – because it is paid every month regularly. What is simple in the foreground has to be complex in the background. EMI is made of Principal component & an interest component calculated monthly. Every EMI (mind it – there are 240 EMIs in a 20-year loan) has different principal & different interest component every month. The principal component increases every month & the interest component decreases every month. But both put together result in same EMI every month. Don’t be a hero – use PMT function in excel to compute it.

Reducing Balance:

It is a term used but not understood well. It is also very simple. It means that banks will charge interest on the loan amount outstanding. Remember we told you about EMI made of principal component and interest component. Well the principal component that the Bank recovers every month from your EMI reduced the loan amount outstanding. The next month’s interest is levied on that and hence the name Reducing Balance. Some people don’t understand this so they do it in a simple way. Total all the EMIs they have to pay, subtract the principal from that –they get the interest portion. This interest portion they divide the loan tenure (in years). The result which they get – they divide by loan amount & they get an interest rate. If you wouldn’t have already guessed, the interest rate so arrived is less than the actual loan rate. Why? That’s another story – it’s because Banks take money from you every month. So what? Forget it!!

Car Loan explained in detail

This is going to get technical. Don’t tell me I didn’t warn you! However, there are a few things that you need to know.

Ex-showroom & On-Road Price

I am sure if you have reached till here in the article, you already know the difference between ex-showroom price & on-road price. Still for academic purpose, ex-showroom price of a car excludes the local (state) taxes & statutory charges. On-road price, however, is a different animal all together. It includes cost of registration, octroi, road tax, insurance, and all other taxes or charges depending on state-to-state, car company-to-car-company, dealer-to-dealer. You can squeeze some value out of this price.

Advance EMI or not

Now this one is the best – a Bank official comes to you & offers lower EMI on your car loan. Everything looks the same but he insists on taking an advance EMI. You don’t feel it is too much. But as I told you earlier, finance calculations are difficult.

EMI of a 10% 5 year loan with Advance EMI = EMI of a 9.65% 5 year loan without Advance EMI.

So whenever you are given an offer of advance EMI that may look like a reduced EMI on similar interest rate – WATCH OUT – you are just being ‘number-hunted’.

0% Car Loans

While I was writing this article, a mail for 0% finance landed in my mailbox. I laughed. What an eye-wash – there is nothing like a free lunch. They would somehow make it from you in one way or the other. Lesser discounts, compulsory insurance from them or the likes.

Pre-payment Penalty

Look out for the Bank that doesn’t charge a pre-payment penalty. Often one takes a car loan for 5 years, often one feels the need of pre-paying it. Apart from ability to pay back the loan that one develops over the period, there is another very critical reason associated to it.

EMI on 3 year Car Loan of 5 lacs = EMI on 20 year Home Loan of 12.5 lacs.

So you see, you may encounter a scenario where when you go for buying a house, the banker tells you that major portion of your eligibility is blocked by a car loan which is ending soon but is blocking your EMI paying eligibility so you have no other choice but to clear off the car loan to make way for a longer duration and more necessary Home Loan.

Document List

Documents required for Car Loan

Salaried

Self Employed Professional

Self Employed Non Professional

Application form

Y

Y

Y

KYC

 

 

 

Photographs

Y

Y

Y

Identity Proof

Y

Y

Y

Address Proof

Y

Y

Y

Age Proof

Y

Y

Y

Bank Statements

Y

Y

Y

Signature Verification

Y

Y

Y

Income Proof

 

 

 

Latest Salary Slip / Form 16

Y

 

 

Income Tax returns of 2 previous financial years along with complete financial/audit report.

 

 

Y

Income Tax Returns of 2 previous financial years.

 

Y

 

Other Documentation

 

 

 

Business Stability proof / Ownership proof

 

Y

Y

Employment Stability Proof

Y

 

 

Partnership deed and Letter signed by all partners authorising one partner

 

 

Y

Companies and Societies: Resolution by Board of Directors (or such managing body) and Memorandum and Articles of Association

 

 

Y

Disclaimer

The data generated herein is completely and solely based on the information/details provided by you in response to the questions specified by the site BankerBhai.com. Such information and the resultant data is provided only for user's convenience and information purposes. BankerBhai.com does not guarantee accuracy, completeness or correct sequence of any the details provided therein and therefore no reliance should be placed by the user for any purpose whatsoever on the information contained / data generated herein or on its completeness / accuracy. The use of any information set out is entirely at the User's own risk. User should exercise due care and caution (including if necessary, obtaining of advise of tax/ legal/ accounting/ financial/ other professionals) prior to taking of any decision, acting or omitting to act, on the basis of the information contained / data generated herein. The information contained / data generated herein may be subject to change, updation, revision, verification and amendment without notice and such information/data generated may change materially.

Trending Knowledge-Base

View All
10
How To Practice In Order To Build A Habit For Money Saving

There is a saying ‘Easier said than done’. It is actually true in case of saving money also because talking about saving is very easy and getting it started rea...


10
Different Scenarios For Saving And Investment

Saving is that component of disposable income which is not used for present consumption. People do savings to accomplish their urgent requirements. It decides t...


;