Steps to Use EMI Calculator for Car Loan
Today, buying a four-wheeler has become a necessity. Most households have at least one car to facilitate group outings. Also, Indians consider owning an automobile a status symbol, making it an aspiration for many. If you dream of buying it, the prospect is within your reach. You no longer need to wait to accumulate the funds. There are several financing options for the purpose.
A Car Loan is one of them. It is when banks offer financial assistance specifically to buy a new or used automobile. You get to make the pick based on your budget, and lenders finance it. The lending amount gets recovered with an interest rate. If you understand this cost, planning your equated monthly installments becomes easier. Banks offer a tool called EMI calculator for Car Loan to help with computation. Follow these steps to use it:
Enter Principal Amount
Lenders provide a tab with a pre-set amount to select the borrowable amount. They set the extremes after evaluating the vehicle's showroom or on-road price. You get financed for up to 80% to 90% of the total cost, while the rest is your contribution. Evaluate the fund requirements after estimating the same. Ensure to stick within the budget to avoid over borrowing and increasing interest.
Select Interest Rate
This is an essential element that directly impacts the Loan cost. Lenders let you select from the pre-set value through a sliding bar. They fix it based on their policy and eligibility criteria. Even a slight change in it impact the EMI amount considerably. Hence, getting the best Car Loan interest rate affects the repayment flexibility. Remember this while selecting your expected interest rate.
It is yet another variable that directly impacts the instalments. The EMI is lower when you opt for a longer tenure and vice versa. This may seem ideal to get the much-needed flexibility. However, it negatively impacts the Loan cost. A shorter tenure is better than going debt-free earlier with lower interest. Hence, choose a lower term depending on your financial condition.
Your choice is not the ultimate decision. The tool poses no restrictions on usage. Hence, you may try different combinations to see what works best. Try changing the tenure until you get a desirable result.
After entering the variables, the EMI calculator for a Car Loan displays output within minutes. The results include a break-up of payable EMI, principal amount, and total cost. They are automated, which eliminates the chances of errors. You also can refer to charts and graphs for easy understanding.