If you like to buy a car with loans, then emi calculator for auto loan can help you decide how much to pay each month. This tool counts down the loan amount and remaining interest till it gets paid off. To use this auto emi calculator, you need to know the vehicle price, down payment amount and tenure of the loan.
Emi refers to the equated monthly instalment that is an interest component and monthly principal component, of the loan amount, over the tenure of the loan. The total emi paid is sum of the interest component and monthly principal component. Interest component on each payment is calculated based on the cost of borrowing (cob), rate of interest (rf) and repayment tenure (t). The EMI calculator helps you calculate EMI for both salaried or self employed borrower.
The easiest way to calculate EMI for an auto loan is by using the online EMI calculator.
It is a simple tool which you can use to calculate your monthly payments or interest rate, based on the loan amount and tenure.
You can also use this calculator if you want to know how much interest will be charged on the loan.
The easiest way to calculate EMI for an auto loan is to use a calculator.
The first step is to enter your monthly income, which will be used to calculate your EMI. Then, enter the amount of money you want to borrow and the interest rate that has been offered by your bank. Finally, enter the number of years over which you want to repay this amount.
This will give you an idea of how much interest will be charged on the loan and how much money will be deducted from your salary every month.
What is an EMI?
Whenever we discuss loans, the first word that hit our mind is EMI. EMI stands for Equated Monthly Instalment, the monthly payments of a fixed amount that we pay for the loan taken. The good thing about EMI payments is that it includes both principal and interest of the loan amount. The interest portion adds the major portion of the EMI payment in starting stages. However, as we go forward with the loan tenure, the portion of the interest repayment portion reduces and the principal repayment portion increases.
Factors affecting EMI
EMI of a loan have three major factors on which it depends:
- Loan Amount: This stands for the total amount or the principal amount that the individual has borrowed.
- Interest Rate: It is a rate at which the interest is charged on the amount borrowed.
- Tenure of the Loan: It is an agreed loan repayment time frame between the borrower and the lender.
EMI Calculator: Definition
EMI Calculator is a device that uses mathematical formulas and calculations to find out the EMI’s of the given data. It requires data like the principal amount, the rate of interest charged on that amount and the time you can return the amount in instalments. When you give this data in the EMI Calculator, it calculates the data as per the formula of EMI calculation, and within seconds, you’ll get the EMI you need to pay monthly.
Formula
By using the given formula one can calculate the EMI of the amount, Check the formula here:E=P×r×(1+r)n((1+r)n–1)E=P×r×(1+r)n((1+r)n–1)
Where, E = EMI, P = Principal amount, r= rate of interest and n = Tenure in months.
Features of EMI Calculator:
- An EMI calculator calculates the amount you need to pay as EMIs in seconds.
- By knowing the EMI amount, you can plan your budget and spending.
- You know the total amount that needs to be paid and the rate of interest charged.
- It helps you to know the loan tenure that suits your budget.
How is EMI Calculated?
You have to use a mathematical formula to calculate EMI is: EMI = P × r × (1 + r)n/((1 + r)n – 1) where P= Principal amount, r= rate of interest, n=Tenure (in months).
Let assume a principal amount is Rs. 1 lakh with a 10% interest rate and 12 months tenure:
| Principal Amount | ₹100000 |
| Interest Rate | 10% |
| Tenure in months | 12 |
| EMI | 8792 |
On these three factors, the EMI payments are directly proportional to the principal and interest and inversely proportional to the tenure of the loan. If the loan amount or interest rate is high then the EMI will also be high. If the tenure of the loan increases, then EMI payments decrease.
Example: if a borrower takes ₹10,00,000 from the bank at 10.5% annual interest for 10 years (i.e., 120 months), what will be the EMI?
Use the above formula and place the above given data:
EMI = P × r × (1 + r)n/((1 + r)n – 1)
then EMI = ₹10,00,000 × 0.00875 × (1 + 0.00875)120 / ((1 + 0.00875)120 – 1) = ₹13,493.
The monthly EMI ₹13,493 for 120 months takes to repay the entire loan amount.
Uses EMI Calculator
EMI Calculator is easy to use, spontaneous to understand and deliver the result in seconds. By using EMI Calculator you can find out EMI for a personal loan, home loans, car loans, education loans or any other loan using.
You need to put this information in EMI Calculator:
- Principal loan amount (rupees)
- Loan Tenure (months or years)
- Interest Rate (percentage)
Enter the values directly in the relevant boxes and then submit the data, EMI calculator will calculate your EMI amount within seconds. You can alter the data anytime as per your need and you’ll get the instant result with accuracy.
The payment schedule table also available for payments made every month/year of the entire loan duration is displayed.
Loan Amortization Schedule
It is a tabular presentation of the loan with the EMI payment. This table shows the break-up between the interest and principal components of a particular EMI payment. This schedule helps the person know how much the loan is paid and how much outstanding is left to be paid. It contains complete information of EMI Calculator like the time period of payment, EMI, interest, principal payment and the outstanding amount. If the borrower wants to foreclose the loan or refinance his loan, this Loan Amortization Schedule is very helpful in such cases.
Floating Rate EMI Calculation
A person needs to calculate the floating/variable rate EMI for two different cases: optimistic (deflationary) and pessimistic (inflationary). The two factors which you control regarding loan is the amount and tenure. It means you decide how much you will borrow and how long you can repay the loan, i.e. time. But the interest rate is varying in nature and determined by the banks & HFCs as per RBI guidelines. There can be two extreme possibilities of increase and decrease in the rate of interest as a borrower, and you have to calculate EMI under these two possibilities. This calculation type will let you know how much EMI is affordable, the time frame of your loan, and how much you shall borrow.
Optimistic (deflationary) case: Assume the interest rate drops by 1% – 3% from the present rate. Take this situation into consideration and then calculate your EMI. Your EMI will be reduced in this situation, or you may choose to shorten the loan tenure. For example, if you want to take a home loan to buy a house as an investment, an optimistic case enables you to compare this with other investment opportunities.
Pessimistic (inflationary) case: Opposite to the optimistic point, let assume that the interest rate is hiked by 1% – 3%. Is it feasible for you to pay the EMI without much struggle? Even a 2% rise in the interest rate can result in increase in monthly payment for the entire loan tenure.
This calculation helps you to plan for such future possibilities. For example, a loan made you make a financial commitment for the next few months or years or decades. So do take these cases for best and worst and be ready for both.
FAQs
Q. How is EMI calculated?
A. Mathematically, EMI is calculated as under:
P x R x (1+R)^N / [(1+R)^N-1]
P = Principal amount of the loan
R = Rate of interest
N = Number of monthly instalments.
Q. What happens if the rate of interest decrease or increases during the loan tenure?
A. In a floating rate loan, if the interest rate reduces during the tenure, a higher amount is adjusted with the principal amount, and the loan gets repaid sooner. On the other hand, if the interest rate increases, then a larger portion is adjusted towards the interest rather than principle, which leads to a slight change in loan tenure, assuming the EMI is kept the same.
Q. How to use an EMI Calculator?
A. On this Embibe page, we have provided the steps to use an EMI Calculator and also provided the steps to calculate manually.
Q. What is the full form of EMI?
A. EMI Stands for Equated Monthly Instalment.
Q. What is the use of EMI calculator?
A. It is a utility tool, which finds the amount by mathematical calculation which you have to repay each month. EMI calculator can calculate the EMIs of a car loan, home loan, bike loan, or personal loan and all types of other loans within seconds.
What is Car Loan EMI?
A car loan is one of the various types of secured loans taken from a bank or financial institution for buying a car. Owning a car has almost become a necessity in today’s fast-paced world. You can either opt for a new car or a used one. Your budget plays a vital role in determining the car, the downpayment you can afford and the amount you require as a loan. You can repay the loan in a pre-agreed tenure in affordable EMIs. If you default on the loan, your credit score will fall, and the lender could seize the car to make up for their loss. Banks offer car loans at affordable interest rates and tenures without you having to stretch your budget. The car loan EMI is made up of the principal and interest portion of the loan. The EMI would remain fixed throughout the loan and would be repaid through instalments each month.
What is a Car Loan EMI Calculator?
The Car Loan EMI Calculator is a utility tool that helps you to determine the equated monthly instalments you must pay the lender, throughout the car loan. You get to know the amount you must borrow, the interest rate and the Car Loan EMIs over the tenure of the loan before you walk into the bank. This tool consists of a formula box that has three sliders, namely Loan Amount, Loan Tenure, and the Interest Rate. Once you fill in the details, the Car Loan EMI Calculator will show you how much to repay the bank each month.
How does Car Loan EMI Calculators work?
You can calculate the Car Loan EMI Amount with the help of the mathematical formula: EMI Amount = [P x R x (1+R)^N]/[(1+R)^N-1] , where P, R, and N are the variables. This also means that the EMI value will change, each time you change any of the three variables. Let’s discuss these three variables in detail.
- ‘P’ stands for the Principal Amount. It is the original loan amount given to you by the bank on which the interest will be calculated.
- ‘R’ stands for the Rate of Interest set by the bank.
- N is the number of years given for the repayment of the loan. As you must pay the EMIs each month, the duration is calculated in the number of months.
So, if you take a car loan of Rs 10 lakh at an interest rate of 12%, the approximate EMI will be: P = Rs 10,00,000, R = 12/100/12 (You must convert into months), N = 2 years or 24 months. EMI = [10,00,000 x 12/100/12 x (1+12/100/12)^24] / [(1+12/100/12)^24-1] EMI = Rs 47,073.
Benefits of using the ClearTax Car Loan EMI Calculator
The ClearTax Car Loan EMI Calculator is a hassle-free generic tool, where you enter the loan amount, number of months and the interest rate. You get a clear idea on the car loan EMIs you would be paying the lender. This will help you to get your finances in order, before applying for the car loan. The Car Loan EMI Calculator shows you the Car Loan EMIs in seconds, eliminating the need for complex manual calculations. One of the main benefits of a Car Loan EMI Calculator is that it helps you to choose the loan tenure for the repayments. Selecting a shorter duration allows you to repay the car loan more quickly. However, the Car Loan EMIs will be on the higher side. You will be able to save money on the interest repayments. If you choose a longer tenure, the car loan EMIs will be on the lower side. However, you will incur a higher amount on the interest repayments.
Factors Affecting Car Loan EMI
Several factors affect the car loan EMI calculation. As the EMI depends broadly on the principal amount, tenure, and rate of interest, any change in these variables can result in a change in the EMI amount. The other factors are:
- Category (Salaried, Self- Employed Professional or a Businessman)
- Income slabs
- Age group
- Tenure of loan
- New or used cars
- Car loan scheme
- Car loan applicant
- An account with the bank
The loan eligibility will also depend on the value of the car selected by you.
FAQs on Car Loan EMI Calculator
- How does the term (duration) affect my interest amount?It is essential to realise that your interest rate is not the only factor that determines the total amount of interest you pay on your car loan. Your car loan tenure plays a significant role in determining the interest amount you repay the lender. As a general rule, for the same interest rate, the longer your duration, the higher are the interest repayments.
- What are the current interest rates for car loans?Banks are offering car loans with annual interest rates ranging from 8.5% to 12%. During festive seasons, some banks agree to waive off processing fees or even relax their current rates. Your credit history also plays a major role while you negotiate on the interest rates. If you have a higher credit score, you may bargain for a lower interest rate.
- Which one is better, Car Loan EMI Calculator or Excel Calculator?The Car Loan EMI calculator is tailor-made to calculate the Car Loan EMIs in seconds. It’s easier to use the Car Loan EMI Calculator as compared to the Excel Calculator.
- Can the Car Loan EMI calculated by the bank be different from that calculated by the EMI Calculator?It will be the same, provided you enter the same values. Please note that even a minor change will result in a difference in the final value. If the bank modifies some of the parameters, you will find the figures to be different from the EMI Calculator.
- Will the Car Loan EMI Calculator help me understand how much EMI is payable after I repay a certain amount of principal as a chunk during the loan tenure?Yes. Feed in the details of the outstanding balance principal and the tenure (provided by the bank on such prepayment). The EMI calculator will help you calculate your EMI for the outstanding balance period.
- Is the car loan calculator the same as home, personal loan calculator?These calculators are the same at the primary level. However, the Car Loan EMI Calculator shows you the specific information on the car loan.