Car Loan EMI Calculator

Car Loan

Is there a particular car you saw on road and couldn’t stop gazing at it? Or one car you have been wishing to own since the longest time?

Buying a car in India was a matter of status symbol for very long. To an extent it still is, but the purchasing pattern is transforming. It is more based on needs and the purchasing power as against what was in the past.

Car is the second most aspired asset after a house for many. It is more of an emotional decision and a financial, as against in the US it is a commoditized decision. And Goods & Service Tax has added one more reason for the buyers to cheer. Automobile companies have reduced the prices and might offer many such offers this festive season. Additionally, with Independence Day and a sequence of many festivals anticipated in coming few months will give you many reasons to boost your excitement.

After meeting all the financial obligations, it is difficult at times to buy a car. However, car loan can make your dream come true.

So, before you start your car research, have a look at your own financial health. Understand the purpose of buying a car and bear few necessary points in mind.

Check your credit worthiness and eligibility to buy a car loan.

Car Loan Calculator

Personal Loan Calculator is a kind of tool which helps you to calculate your future monthly instalments assigned for re-payment of your Personal Loan.

With PersonalFN Personal Loan Calculator you can estimate your future EMIs. This will help you to budget your future finances and help you make responsible decision.

Formula for calculating Car Loan EMI

P = Principal loan amount;

R = Rate of interest calculated on monthly basis i.e. (R= Annual rate of interest/12/100).

For instance, if R = 10.75% per annum, then R= 10.75/12/100 = 0.0089; and

N = the number of monthly installments.

For example, if you borrow Rs 5,00,000 from a bank at 10.75% rate of interest for a tenure of 10 years then,

How to use Car Loan Calculator?

This Car Loan calculator generates result in a split second and enable you to understand whether the monthly payment would be affordable for you.

All you need to input:

1. Car Loan amount (in Rs)
2. Car Loan rate of interest (percentage)
3. Car Loan Tenure (in Months or years)

You can either use the slider or enter the loan values in the Car Loan EMI calculator table. As and when you change the input values the calculator will re-calculate and display the new result.

Car loan EMI calculator generates not only the EMI result but even tells you the total loan interest payable throughout the loan tenure. The pie-chart further shows the break-up of total payment of interest and principal amount. Hence, Car Loan calculator makes it easier to understand the total principal and interest amount which you are supposed to pay. This will give you a clear picture about the total cash outflow you need to keep in mind before you opt for a loan.

PersonalFN believes that one may have EMI-to-income ratio of about 40% of the total household income.

Before taking a loan use our EMI calculator to make a prudent decision.

Factors to look at during Car Loan application

1. Interest rate

   When you take a loan, the interest outgo is one of the vital deciding factors. The car loan interest rate depends on a variety of factors: type of vehicle you wish to buy on loan, your credit worthiness, risk profile, tenure of the Car loan, whether you’re a salaried individual, self-employed, priority banking customer, among other things. The interest outgo would determine your EMI and has a bearing on your budgets and long-term financial wellbeing.

2. Processing fee & other charges

   Availing a Car Loan does not stop with just interest rates; there are processing, and other charges levied by lenders. The processing fee is the one-time fee charged as a certain per cent of the loan, but capped at an ‘x’ amount. Some lenders levy a fixed processing fee. A higher processing fee impacts your total cash outflow while availing a loan.
   As regards the other charges, they include: prepayment charges (also known as foreclosure charges), part-payment charges, late payment penal interest, loan cancellation charges / re-booking charges, cheque bounce charges and so on, all of which you should examine carefully.

3. Loan Tenure

   The maximum tenure for a Car Loan is usually between 5 to 7 years. A higher tenure can reduce your EMIs, making repayments comfortable, while opting for a lower tenure (of say 3 year or 5 years) increases your EMI.

4. Repayment flexibility

   Apart from the above pivotal aspects, assess if the lender provides you with the flexibility to repay your Car Loan sooner, and at what cost does this come at. This flexibility can help you prepay the Car Loan ahead of time, as well as provide a relief in distressing times. However, it’s best to adopt financial discipline in order to repay loans on time and maintain your financial health in the pink always.

5. Customer service

   You want to buy your dream car with a smile on your face, don’t you? So, ensure that the customer service at the lender has high standards. This service can even help keep track of your Car Loan, allow you to be in better control of your personal finances. Remember, while lenders will have varying customer service standards, there are some basics of good service that are universal.

6. Terms & conditions

   Make sure you read the terms & condition carefully to make an informed choice. This will avoid issues later and ensure a pleasant, hassle-free experience.

Benefits of Car Loan

• Makes your dream of owning a Car come true

  Many banks provide up to 100% car financing option. Hence, you do not have to put your dream car on hold.
  You don’t have to touch your existing investments assigned for other important financial goals such as children’s future (their education and marriage needs) and your own retirement

• Flexibility while choosing the Tenure

  Car loans are offered for a tenure up to 7 years. This gives you flexibility to plan your finances and convenience to choose the tenure of your choice.

• Secured Loan

  You don’t have to mortgage your existing assets; because a car loan is a secured loan (secured against the car itself). Meaning, until the loan is repaid in full, the lending institution/bank has right of lien on the asset, which confers upon it the power to seize the asset and recovering the dues by selling the vehicle.

• Interest Rate

  You have a flexibility to choose the type of interest rate of your choice. You can either opt for a fixed or variable rate of interest.

• Flexible Mode of loan payment

  You can either choose to pay through post-dated cheques or auto debit facility. With auto-debit facility your EMI will be automatically deducted from your bank account.

• Can Negotiate Car loan interest rate

  If you have a good credit score and healthy relationship with the bank or financial institute you can negotiate with them.

• Facilitates you to achieve your other financial goals

  By opting a car loan your existing finances would not get exhausted. Further, the loan can be worked out to suit your budget, facilitating you to save. You get an opportunity to own the car and spend the happy moments with your family while you service the loan.

• Tax Deduction

  A tax deduction may be applicable if you plan to use your vehicle for business purpose. Remember, paying upfront in cash could put you under the Income-tax department’s radar, more so after demonetisation. But, paying an upfront amount to the extent of the required down payment is perfectly fine.

Car Loan Eligibility

A salaried individual, self-employed—whether in business or profession—are eligible to apply. One can even apply on the name of the HUF, firm, company, etc. to avail of the depreciation (a deductible expense) benefit, under the Income-tax Act.

Individuals between 18 to 75 years, irrespective whether salaried or self-employed, are eligible, subject to certain conditions.

Salaried individuals preferably should have a total work experience of at least 3 years, while for a self-employed, a minimum of 2 years in the current business or profession. In case of the latter, the stability counts in the due diligence process, while for salaried individuals, the type of employment, who is the employer, carries weight.

Moreover, where you reside i.e. country, urban/semi-urban/rural area, and the number of years you’ve been residing there, type of residence, whether on rent, family-owned, or self-owned, matters.

The bank or the lending institution would look at your monthly income —and the better it is, higher is the amount of Car Loan that you will be eligible for, and greater is the chance of the Car Loan being disbursed soon. Broadly, the monthly income requirement is a minimum of Rs 10,000, subject to the type of vehicle you seek to buy and depending on the lender’s requirement.

Documents required for a Car Loan disbursement

1. Income statements
2. Bank statements
3. Salary slips and Form 16
4. Latest Income-Tax Returns
5. Credit report
6. Age proof (birth certificate, passport, Aadhaar card, voter id, PAN card etc.)
7. Address proof (Aadhaar card, passport, electricity bill, telephone bill, ration card, etc.)
8. Photo identification proof (Aadhaar card, voter id, PAN card, passport, driving license, etc.)

Lending institutions would closely scrutinise the following documents before deciding on the Car loan amount to be disbursed. Besides, the type of vehicle you wish to buy, the Car Loan tenure (3 years, 5 years, or 7 years), employment stability, and pre-existing EMIs (or Equated Monthly Instalments) on outstanding loans will be looked at closely before approving your Car Loan at a certain EMI.

Before you avail for a Car Loan…

• Know your finances precisely

  Follow the much needed discipline to keep your debt-to-income ratio healthy (Ideally, your monthly debt commitment should not exceed 40% of your gross income.) Make sure you aren’t compromising and jeopardising your long-term financial goals and also, do not let this strain your current lifestyle to a great extent.

• Have a repayment plan in place

  Ascertain the loan repayment schedule and have a repayment plan in place so that you don’t miss any EMI/s and end up paying a penalty.

• Ensure you hold adequate insurance

  As a bread winner, while you endeavour to do the best for your family, insure yourself optimally. The insurance money can aid the financial security of your family members and pay the outstanding loan.

• Keep your family in the loop

  When you’re planning to avail a loan, make sure you discuss it with your family. Sharing your rationale with them will keep them well-informed and their opinions will help you gain a better perspective. Even it is a surprise, keeping your family in the dark may not be in their best interest.

Buying a car is life milestone. And today, owing a car is no longer a luxury, but a comfort that is within one’s reach with attractive car loan facility. Remember, paying upfront in cash could put you under the Income-tax department’s radar, more so after demonetisation. So, bring in the joy and comfort that your family is yearning for.

Happy Driving!