Car Loan EMI Calculator

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CAR Loan EMI Calculator

A car loan is a credit instrument offered by banks and other lenders that helps you finance the purchase of a car with minimal initial payment. The borrower can repay the loan in EMIs over a period of time and at an agreed interest rate. It is necessary to calculate the car loan EMI before applying for a loan. A car loan calculator helps you to determine the EMI and interest payable on the borrowed car loan.

A car loan EMI calculator is a simple tool that can help you make an informed decision while looking for a car loan.

How Car Loan EMI Calculator Works?

An auto loan calculator saves you from doing the manual calculations of estimating your car loan EMI. It requires only a few inputs to calculate your monthly installment and payable interest amount.

Car Loan Amount: The amount of loan that you want to borrow from the lender. This depends on the market price of the car.

Car Loan Tenure: The repayment period you agreed with the lender to repay the borrowed amount.

Interest Rate: The applicable rate of interest charged by the lender on the car loan.

Based on these inputs, the car loan interest rate calculator will calculate and show you the EMI, total payable interest, and total repayment amount. You can also easily change the inputs and get results accordingly in real-time.

How to Calculate Car Loan EMI Amount?

CashZeni follows a standardised formula:

E= P. R. (1+R)^n/[(1+R)^n -1]

The various components of the formula are as follows –

PDetermines the principal amount
RThe rate of interest payable every month
NThe total tenure in months
ETotal EMI payable each month

Let us understand how this formula works with an example.

Suppose you have borrowed a car loan of Rs 4 lakhs for a period of 6 years from a financial institution. The agreed interest rate is 12 percent per annum. Now, the value that will be used in the formula are as follows:

P = 4,00,000

n = 6 x 12 = 72

R = 12/(12 x 100) = 0.01

Putting these values in the aforementioned formula, we get

EMI = 400000 x 0.01 x (1+0.01)^72/{(1+0.01)^72-1}

EMI = Rs 5,254

Total Interest = Rs 3,56,529

Total Payable Amount = Rs 5,56,529

As you can see, the formula requires usages of a number of variables and involves complex calculations. A car loan interest calculator does all the calculations and shows you all the EMI details instantly. This saves your time and effort and gives you an accurate picture of how your repayments will be.

Importance of a car loan calculator

You may ask why you need an online emi calculator if the lender is anyway going to do all the calculations. 

First off, there is tons of competition between car loan providers. You can get the best deal by trying out the calculators of different lenders. No lender will tell you that they are more expensive than others.

The most crucial benefit that you get from a car loan emi calculator is that it helps you set your expectations about car finance before you even start the process. 

There can be a considerable disparity between lenders concerning the interest rates. You can’t change the interest rate of a particular provider, but you can select the provider with the lowest rates.

What are different car loan emi interest rates?

Car loan emi interest rates are primarily of two types, fixed and floating. Fixed-rate remains fixed during the loan tenure, while a floating rate may change depending on changes in the financial market. Even when you choose one of these two, the interest rate will vary from lender to lender. A car loan calculator gives the exact emi liability, while you can check your eligibility using a car loan eligibility calculator.

The fixed interest rate may be higher than a floating rate, but it has no risk of rate escalation and the borrower can be sure of his exact loan liability. If the financial market is favorable, a floating rate of interest can be a profitable option. It will go up later if the mclr increases.

To know how much emi you have to pay for the offered rate of interest, check the cashzeni car loan eligibility calculator.

Car Loan FAQs

Are there any tax benefits like a home loan? 

No. car loans do not have any tax benefits like home loans. 

Is collateral required while applying for a car loan? 

You don’t need any collateral for your car loan. however, you do need to have the car’s registration certificate (rc). the rc endorsed by the bank is later on canceled on the repayment of the loan. 

What is the maximum tenure of a car loan?

The maximum tenure of the car loan is 7 years. 

Is it possible to avail a car loan for a used car?

Yes, most lenders offer car loans for used cars.

Can I choose the floating interest rate option on a car loan?

Yes, you can choose the floating interest rate option for your car loan. Your EMI will vary with the change in the car loan interest rate offered by the lender.

What are the documents required to get a car loan?

Some mandatory documents are – 
– Age proof, identity proof, and address proof for kyc 
– Income proof (salary slips or form 16)
– Bank statements
– ITR with audit reports (of 2 last financial years)
– Ownership proof
– Business stability or employment proof
– Partnership deed