Car Loan EMI Calculator
Having a car in today’s times is no more a luxury unlike how it used to be, a few decades ago. Owning a car has now become a necessity that each one of us must have. Buying a car is a substantial investment in itself. Hence, it becomes vital to borrow a car loan while buying a car.
However, it must be noted that the principal amount on a car loan is not generally very high, due to which, there is a relatively shorter time duration for the repayment of the borrowed amount. Repayment of the car loan amount within the pre-decided tenure may even lead to forcible taking away of your vehicle. Hence, you must have a fair idea of your EMIs on the car loan. You must also ensure that your EMI equates the amount that you will be able to pay every month, apart from your regular monthly expenses. Paytm’s car loan EMI calculator helps you do this, within seconds!
Understanding Car Loans
Before borrowing a car loan, you must note the following points-
- It is important for the borrower to ensure that he/she is eligible for the loan to ensure that the loan application does not get rejected
- Before borrowing the loan, one must have a fair idea of the amount that he/she will be able to repay. While doing so, it is important to consider various factors such as monthly income, expenses, liabilities, etc.
- You must wisely decide which car you can buy. Since there is a wide variety of options available in the market, it is easier to get lured by the expensive ones. However, you must have a set budget first and then make the decision of buying one
- Go through the car loan application process thoroughly, check your credit score beforehand, verify your application twice and then wait for the disbursal of the loan amount
What is the use of a Car Loan EMI Calculator?
A car loan EMI calculator helps you calculate the amount of monthly installments that you’d be paying on your car loan.
The car loan EMI calculator makes use of the factors such as the actual loan amount, loan tenure and the applicable rate of interest on the borrowed amount to calculate your EMI amount.
A car loan EMI calculator actually works on the following formula-
EMI = [P x R x (1+R)^N]/[(1+R)^ (N-1)]
EMI stands for Equated Monthly Installment
P refers to the principal amount, or the actual amount borrowed
R refers to the rate of interest on the loan amount (to be calculated monthly)
N stands for the loan duration; meaning the time period in which the loan amount must be repaid (to be used in terms of months)
Let’s take an example to understand this better-
Suppose, you take a car loan of Rs. 10 lakh for 2 years at a rate of interest of 20% p.a.
Now, since the rate of interest and loan duration given above are in different units, we need to first convert these
Loan duration in months - 12*2 = 24 months
Monthly Rate of interest - 20/12 = 1.66% p.m.
Now, using the above formula-
EMI = [P x R x (1+R)^N]/[(1+R)^ (N-1)]
EMI = [10 x 1.66 x (1+1.66)^24]/[(1+1.66)^ (24-1)]
EMI = Rs. 50,896
An EMI calculator uses the above formula to calculate the EMI on car loan in seconds. When using an EMI calculator, you don’t need to go through such long calculations of converting different units of loan tenure or rate of interest into months. Neither do you need to use such a formula to do the calculations by yourself.
You simply need to enter the three basic details related to your car loan, and you will see your EMI amount within seconds!
Frequently Asked Questions
What factors should be considered when borrowing a car loan?
While borrowing a car loan, you must decide which car to buy considering your monthly income and expenses. Then, you should figure out how much monthly installment will you be able to pay and then finalize the decision of making the purchase.
How is car loan EMI calculated?
You can easily calculate the car loan EMI using the car loan EMI calculator. All you need to do is enter the borrowed amount, loan tenure and rate of interest applicable on your car loan.
What is a Good Credit Score?
There are approximately 51,80,00,000 results available against the question- 'What is a good credit score?'...Read More
How to Check Credit Score for Free?
Paytm mobile application allows a user to check credit score for free by letting them perform a few easy...Read More
Top Reasons Behind The Growing Popularity of Paytm’s BNPL!
BNPL is a credit facility offered by Paytm in partnership with ...Read More
Can I Get a Loan With a Credit Score of 550
If you are planning to apply for a loan with a credit score of 550, there are high chances that banks and...Read More
CIBIL Score and Its Importance: All You Need to Know
While applying for a loan or a credit card, the major concern in a borrower’s mind is whether or not...Read More