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 (Equated Monthly Instalments) over a period of time and at an agreed interest rate. Calculating the car loan EMI before applying for a loan is crucial to understanding your repayment obligations. A car loan EMI calculator helps you determine the EMI and interest payable on the borrowed car loan, making it an essential tool for financial planning.
What is a Car Loan EMI Calculator?
A car loan EMI calculator is a simple tool that helps you make an informed decision while looking for a car loan. It saves you from manual calculations, allowing you to quickly estimate your monthly installment and payable interest amount.
How Car Loan EMI Calculator Works
An EMI calculator for car loans requires only a few inputs to calculate your monthly installment and payable interest amount:
- Car Loan Amount: The amount of loan 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 EMI calculator car loan tool 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.
Car Loan EMI Formula
The formula used to calculate car loan EMI is:
The formula used to calculate car loan EMI is P x R x (1+R)^n/{(1 + R) ^ (n - 1)}
Where:
- P: Principal loan amount borrowed from the lender
- R: Applicable monthly car loan interest rate agreed with the lender
- n: Total loan tenure in months
Example of Using a Car Loan EMI Calculator
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 values 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 7,887
Total Interest = Rs 1,67,864
Total Payable Amount = Rs 5,67,864
As you can see, the formula involves complex calculations. A car loan interest calculator does all the calculations and shows you all the EMI details instantly, saving you time and effort while giving you an accurate picture of your repayments.
How to Use a Car Loan EMI Calculator?
A car loan EMI calculator has a simple interface. Follow these steps to calculate the car loan EMI instantly:
1. Open an Online Car Loan EMI Calculator: Choose INDmoney’s car loan calculator to calculate your EMI easily without any effort.
2. Enter the Loan Amount: Input the amount you wish to borrow for the purchase of your preferred car.
3. Choose the Loan Tenure: Select the repayment period.
4. Enter the Interest Rate: Input the expected interest rate for the car loan.
5. Calculate EMI: The calculator will show you the EMI, payable interest, and total payable amount instantly.
You can also compare car loan offers from different lenders by changing the interest rate and repayment time period in INDmoney’s car loan calculator.
Why Use INDmoney’s Car Loan Calculator?
INDmoney’s car loan calculator helps you determine your car loan EMI easily so you can plan your finances better. Here are some benefits:
- Ease of Access: An online tool accessible from anywhere with an internet connection.
- Comparison of Offers: Compare different lenders’ interest rates and choose the best offer for your budget.
- Flexible Tenures: Estimate EMIs based on different loan tenures to gauge your repayment ability.
- Accurate Calculations: Save time and avoid manual calculation errors.
Understanding Amortization
Amortization refers to the process of gradually repaying a loan over a specified period through regular payments, which include both principal and interest. Each EMI payment contributes towards reducing the principal balance while covering the interest expense. In the initial stages of the loan tenure, a larger portion of the EMI goes towards interest, with a smaller portion reducing the principal. As the loan progresses, the interest component decreases, and the principal repayment increases.
Amortization Table for Car Loan
An amortization table provides a detailed breakdown of each EMI, showing the principal and interest components over the loan tenure. Here's an example of an amortization schedule for a car loan of Rs 4,00,000 at an interest rate of 12% for 6 years:
| Month | EMI (Rs) | Principal (Rs) | Interest (Rs) | Balance (Rs) |
| 1 | 7,887 | 3,887 | 4,000 | 3,96,113 |
| 2 | 7,887 | 3,925 | 3,962 | 3,92,188 |
| 3 | 7,887 | 3,963 | 3,924 | 3,88,225 |
| … | … | … | … | … |
| 72 | 7,887 | 7,881 | 6 | 0 |
Get a Car Loan to Buy Your Dream Car
India is now the fourth-largest 4-wheelers market in the world. The increasing demand for cars has made car loans more accessible, allowing you to buy your dream car with minimal down payment. You can repay the remaining amount in monthly installments over an agreed rate of interest.
Easy Finance
No need for complicated paperwork; lenders readily approve car loan applications with minimal documentation.
No Collateral Required
The car itself is used as security until the loan repayment is completed.
Easy Loan Repayment
Auto-debit facility of EMI on your car loan makes repayment hassle-free.
Flexible Repayment Period
Choose a repayment period based on your financial ability.
Attractive Interest Rates
With many lenders in the market, you can get good offers on car loans. Use the car loan EMI calculator to find the best offer for you.
Frequently Asked Questions
What are the documents required to get a car loan?
You need to fill in the car loan application form and furnish the following documents as asked by the lender:
- KYC Proof
- Income Proof
- Photograph (if asked)
What are the factors that affect my car loan interest?
Your car loan interest rate depends on your credit score and your association with the lender. The total interest amount also depends on the time period of loan repayment.
Can I get a loan to purchase a second hand car?
Yes, you can avail a car loan to purchase a used car as well.
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.