Evaluating Monthly Instalments Using a Vehicle EMI Calculator
Buying a car or bike is exciting, yet it is an expensive affair. The most hassle-free option for everyone to buy a vehicle is to avail themselves of a loan. However, before signing the loan agreement, you need to know what amount you will be paying monthly. An EMI calculator takes care of this. It allows you to compute your monthly payments very easily and plan without any unpleasant surprises. Comparing EMIs in advance makes sure your dream car or bike does not become a burden in the future.
Know About Your Vehicle EMI
An EMI, or Equated Monthly Instalment, is the amount you pay your lender regularly each month as a repayment for your loan. It consists of two parts – the loan (principal) and the interest the lender will levy. Your EMI value depends on three important factors:
- Loan amount: Sum of money borrowed from the lender or bank.
- Interest rate: The annual percentage rate you pay on your loan.
- Loan term: The duration you use to pay back the loan.
What is a Vehicle EMI Calculator?
A vehicle EMI calculator is an online tool which helps you determine the monthly instalment you would need to pay on your loan within a few seconds. You simply need to fill in the loan amount, interest rate, and tenure, and you get a calculated breakdown of your monthly instalment.
All major banks, non-banking finance corporations (NBFCs), and car loan companies offer this facility on their websites. The car loan EMI calculator saves time and prevents errors from manual calculations and allow you to make informed financial choices.
How to Utilise a Vehicle EMI Calculator
It is easy to use a car loan EMI calculator. Here is how to do it:
- Enter the loan value: This is the price of the car minus your down payment.
- Add the interest rate: Use the rate your lender or bank offers.
- Select the payment term: Choose the payment term in months or years.
- Click Calculate: Your monthly EMI charge will be shown immediately by the calculator.
Some calculators may show you the amortisation schedule, which shows you how much of every EMI goes towards the principal and how much goes towards the interest. To be precise, always use realistic figures and compare different tenures and interest rates before you finally decide.
Benefits of Comparing EMIs Before Purchase
Estimating your EMIs prior to applying for a loan has several benefits:
- Helps in establishing a reasonable budget: You can choose a car that is within your repayment capacity.
- Prevents over-borrowing: Prevents the situation where EMIs consume the bulk of your income.
- Simplifies lender comparison: By putting in various rates, you are able to tell which Car Loan offer is most suitable.
- Shows total repayment cost: You can view the interest you will pay over the loan period.
- Improves financial planning: You can budget other expenses without being stretched.
Factors to Consider in Addition to EMI Results
While the EMI number is most important, it is not the only thing you need to focus on. Take these considerations also into account:
- Processing charges and fees: Some of the lenders have a one-time processing charge, which adds to your overall cost.
- Prepayment or foreclosure terms: Know if you can prepay your loan before maturity without a fee.
- Fixed or Floating rates: With fixed rates, your EMI will remain the same, while floating rates can change during the term of the loan. Ensure to choose a suitable option for you.
- Impact on tenure: Increased tenure reduces the EMI but increases the amount of interest paid. Keeping these facts in perspective along with the EMI, you make an informed decision.
Takeaway
A vehicle EMI calculator helps in informed decision-making. It helps you estimate exactly what your favourite car is going to be costing you monthly. Thus, making it easier for you to determine the appropriate terms of the loan. Comparing EMIs in advance keeps you in budget, avoids unnecessary loans, and allows you to enjoy your new car without any monetary pressures. So, spend a few minutes on this tool before you decide on your loan. It is a small effort that can end up saving you a lot in the long run.
