Calculating the EMI on a car loan has been made simple and error-free with the use of a Car Loan EMI Calculator. A Car Loan EMI Calculator is a tool that helps determine the EMI that needs to be paid towards the repayment of a car loan. It helps a person decide and select a suitable car loan amount and also helps them manage their finances.
How to calculate the EMI for a Car Loan?
The Car Loan EMI Calculator that’s available on the official website uses the mathematical formula given below to calculate the EMI:
E = P x R x (1+R)^n/((1+R)^n – 1)
Where,
E is the EMI that is payable on a car loan amount
R is the rate of interest that is levied on the car loan
P is the Car Loan Principal Amount
n is the car loan tenure (in months)
The online EMI calculator works in a very simple way. An individual will have to provide details pertaining to their car loans such as loan amount, interest rate, processing fees, and loan tenure. Enter these details into the EMI Calculator and then click the “Calculate” button.
Car Loan EMI Calculator Parameters
The EMI of a car loan depends on three major parameters – Loan Tenure, Principal Loan Amount, and Interest Rate.
- Loan Tenure – The tenure of a loan refers to the loan repayment period during which the borrower pays a monthly EMI to repay the loan amount. It should be noted that the longer the loan tenure, the EMIs that a borrower will have to repay will be smaller.
- Principal Loan Amount – The total amount that has been sanctioned to the borrower by the lender is called the Principal Loan Amount. If the loan amount that has been sanctioned is high, the EMIs that need to be repaid every month will also be relatively high.
- Interest Rate – This refers to the interest rate that has been levied on the principal loan amount. The rate of interest levied on a car loan varies from person to person. Parameters like credit score, loan history, etc. play a vital role in obtaining a good interest rate. If the rate of interest that’s levied on a car loan is high, then the EMIs that will have to be repaid will also be high.
There are other factors which also affect the Car Loan EMIs which are paid and these are:
- Type of interest levied on a car loan
- Making prepayments in parts
- Preclosure of a car loan
- Change in market rates
- Change in base rate
Check the Lowest Car Loan EMI – 2018*
| Bank Name | Interest Rate (New Car) | Interest Rate (Used Car) | Maximum Loan Available | Lowest EMI per Rs.1 lakh for 7 years tenure |
| Andhra Bank | 1-year MCLR + 0.70% | 1-year MCLR + 3.45% | New car: 85% of on-road price for salaried employees and 80% of on-road price for others Used car: 60% of garage value or Rs.25 lakh | Rs.1,614 (new car) Rs.2,217 (used car) |
| Axis Bank | 10.75% to 11.25% (up to 36 months’ tenure) 8.50% to 10.25% (more than 36 months’ tenure) | 14.50% to 16.25% (up to 36 months’ tenure) 13.99% to 14.99% (more than 36 months’ tenure) | New car: 100% of on-road price Used car: 85% of valuation amount | Rs.1,584 (new car) Rs.2,326 (used car) |
| Bank of Maharashtra | 1-year MCLR + 0.25% | 1-year MCLR + 0.75% | New car: 90% of on-road price for salaried class and existing home loan borrowers, 85% of on-road price for others, and 80% of on-road price for corporates Used car: 50% of the valuation amount | Rs.1,619 (new car) Rs.2,110 (used car) |
| Central Bank of India | 1-year MCLR + 0.40% | 1-year MCLR + 1.50% | New car: 90% of the on-road price (up to Rs.20 lakh) and 80% of the on-road price (above Rs.20 lakh) Used car: 75% of the valuation amount | Rs.1,594 (new car) Rs.2,115 (used car) |
| Corporation Bank | 9.30% (Vehicle up to Rs.50 lakh) 9.80% (Vehicle more than Rs.50 lakh) 8.65% (for government employees and defence personnel and vehicle up to Rs.50 lakh) 11.00% (commercial purposes) | New car: 85% of the on-road price (up to Rs.1 crore) and 80% of the on-road price (above Rs.1 crore) Used car: 60% of the valuation amount | Rs.1,617 (new car) | |
| Federal Bank | 1-year MCLR + 0.25% to 1-year MCLR + 0.55% (Floating) | 100% of ex-showroom price or valuation amount | Rs.1,656 (new car) Rs.2,182 (used car) | |
| HDFC Bank | 9% to 10.25% (depending on the make and model of car) | 11.50% to 17.50% (depending on the age, make, and model of car) | 100% of on-road price or valuation amount | Rs.1,622 (new car) Rs.2,275 (used car) |
| ICICI Bank | 7.75% to 17.56% | 10.00% to 17.65% | New car: 100% of ex-showroom price Used car: 80% of valuation amount | Rs.1,699 (new car) Rs.2,405 (used car) |
| IDBI Bank | 9.00% for existing customers (minimum relationship of 3 months) 9.10% for new customers | Rs.1,658 (new car) | ||
| Indian Bank | New car: 85% of on-road price Used car: 60% of valuation amount | Rs.1,658 (new car) Rs.2,270 (used car) | ||
| IndusInd Bank | 12.00% to 28.00% (Small commercial vehicle) 10.65% to 15.50% (Passenger car) 10.65% to 16.00% (Light commercial vehicle) 10.60% to 15.00% (Medium & heavy commercial vehicle) 10.60% to 16.00% (MUV & Jeep) 13.70% to 23.50% (Tractor) | 14.00% to 21.00% | 85% of the ex-showroom price | Rs.1,691 (new car) Rs.2,327 (used car) |
| Kotak Bank | 90% of the car value | Rs.2,199 (new car) Rs.2,485 (used car) | ||
| OBC | Base Rate + 0.50% = 10.20% (Upto 36 months) Base Rate + 0.75% = 10.45% (Upto 84 months) | Base Rate + 3.00% = 12.70% | New car: 85% of the on-road price Used car: 80% (Under TVS) & 70% (Non TVS) of valuation amount | Rs.1,579 (new car) Rs.3,269 (used car) |
| SBI | 8.90% to 9.40% | 1-year MCLR + 4.65% = 12.80% | New car: 85% of the on-road price Used car: 80% of Invoice or Insured’s Declared Value (Certified pre-owned car) 85% of the on-road price (Car loan scheme for used car) | Rs.1,611 (new car) Rs.1,798 (used car) |
| PNB | 1-year MCLR + 0.60% to 1-year MCLR + 1.05% (floating) 1-year MCLR + 0.95% (fixed) | New car: 85% of on-road price 90% of total cost of the car (tie-up arrangement) Used car: 70% of valuation amount | Rs.1,596 (new car) Rs.2,184 (used car) | |
| Tamilnad Mercantile Bank | 8.95% to 10.95% | 8.95% to 11.40% | New car: 85% of on-road price Used car: 70% of the purchase value or market value | Rs.1,606 (new car) Rs.2,073 (used car) |
| Union Bank of India | 1-year MCLR + 0.50% = 8.70% | 1-year MCLR + 3.50% = 11.70% | New car: 85% of on-road price Used car: 60% of valuation amount | Rs.1,609 (new car) Rs.2,224 (used car) |
| United Bank of India | 1-year MCLR + 0.30% = 8.90% 1-year MCLR + 0.25% = 8.85% (women applicants) | 1-year MCLR + 1.05% = 9.65% | New car: 85% of on-road price Used car: 75% of valuation amount | Rs.1,601 (new car) Rs.2,108 (used car) |
*Interest Rates and offers are subject to change according to market rates and without prior notice by the bank
Car Loan EMI Calculator – Advantages and Features
The Car Loan EMI Calculator that’s available on the official website is a very helpful financial tool that assists an individual in making smart decisions on their car loans. Some of the features and benefits that are offered with the Car Loan EMI Calculator are listed below:
- Intuitive and Accurate: The Car EMI Calculator provides accurate results without any error thereby making complex calculations simple and easy to do with just a click of a button. Manual calculations can lead to errors and this can prove to be a disaster when determining our expenses during the loan repayment period. All you have to do with the EMI Calculator on the website is enter your loan details correctly to get the breakup of your car loan.
- Immediate Results: The Bank Loan Calculator can calculate the EMI that a borrower will have to pay on a loan in a matter of seconds. This tool can be used by a borrower before he/she applies for a loan amount. In this way, the borrower can determine his/her monthly expenses after considering the EMI amount which needs to be set aside every month. This helps you plan your finances properly during the loan repayment tenure.
- Repeated Calculations: The calculator is free of cost and can be used a number of times for different values of interest, loan tenure, loan amount, etc. Doing so can help the borrower have a better understanding of their car loan and can also help them determine the loan amount that they can afford without applying a lot of pressure on their finances which comes with the repayment of a car loan and daily expenditure.
- Analytically Compare Car Loans: An individual can use the Car Loan EMI Calculator that’s available on the website to compare car loans offered by various banks by varying the factors that affect the EMI of a car loan like loan amount, tenure, etc. The calculator provides an amortization table along with graphs to help the borrower understand their loan better.
- Prepayments: The EMI Calculator for car loans on the website will compute the information that has been input into the calculator to determine the EMI on a car loan. The tool is quite advanced. It can calculate the EMI on a car loan by considering any prepayments that the borrower intends on making. The borrower will have to input values like prepayment frequency, prepayment amount, etc. With this information, the calculator can give a more accurate result.
Car Loan EMI Calculator – Everything You Need to Know
A Car Loan EMI Calculator can come in handy in a number of situations. The calculator acts as the backbone in the entire process that’s involved in securing a car loan. The calculator can help in a number of ways, right from planning out your monthly budget that you will have to set aside, to the make and model of the car that you would like to purchase. Here are some of the points that you will have to keep in mind when using the online Car Loan calculator:
- The Car Loan EMI Calculator is an easy and hassle-free tool that can be used to calculate the EMI that a borrower will have to pay to a lender in order to repay a car loan. There are a number of portals that offer Car Loan EMI Calculators such as the lenders or financial institution’s official websites as well as banking websites like the official site .
- The Car Loan EMI Calculator will require details about the car loan such as car loan amount, interest rate, and repayment tenure. After these details have been furnished by the borrower, the online EMI Calculator will provide the projected equated monthly installment amount along with the amortization schedule.
- The borrower can also include any prepayments that they wish to make when calculating their EMI using the Car Loan EMI Calculator available on the website. The online calculator will require details such as prepayment frequency, prepayment amount, and prepayment penalty to see its effect on the EMI that needs to be paid.
- The borrower can also include any processing fees that could be levied by the lender on the car loan that has been sanctioned to the borrower. This fee shall be added to the loan amount that needs to be repaid to show the total expenses that you will incur during the loan repayment period.
- The Car Loan EMI Calculator will even provide the timeline of the loan repayment, the loan amortization schedule, and the total interest outgo. The borrower can make an informed decision on the loan that he/she would require with this information.
- The Car EMI Calculator can be used by a borrower to plan their monthly expenses so that they do not have to make many changes to their daily lives when making an EMI payment.
- The borrower should make sure that they use the Car Loan EMI Calculator to check the effects that different interest rates and tenures would have on an EMI. This will help ensure that the borrower purchases the right car loan option.
Methods to Calculate Car Loan Interest and Its Effects on Car Loan EMI
Before you opt for a car loan, you should perform thorough research of the market to find the best plan that suits your needs at the cheapest rates possible. There are 3 ways that a person can calculate the interest that he or she has to pay in addition to his/her car loan – Reducing balance method, 0% financing scheme, and Fixed rate of interest.
- Fixed rate of interest – As the name suggests, the interest rate in this method remains unchanged even after the debt is repaid over time. Here, the amount of interest to be paid is calculated on the total loan. This total amount of interest is then distributed evenly throughout the entire tenure of the loan. To understand this better, see the following example: Let us consider that the principal amount of a car loan is Rs.4 lakh, the interest rate is 10%, and the loan repayment tenure is 5 years. Therefore, the calculation using a fixed rate of interest is: The interest to be paid every year = Rs.4,00,000 * (10/100) = Rs.40,000 The total amount of interest to be paid during the entire tenure = Rs.40,000 * 5 = Rs.2,00,000 Debt to be repaid every year = Rs.4,00,000 / 5 = Rs.80,000 Amount of EMI required to be paid = (Rs.80,000 + Rs.40,000) / 12 = Rs.10,000
- Reducing balance method – In this method, the interest rate is charged on the outstanding principal amount. Even though the rate of interest charged during this process is generally higher than the fixed rate of interest method of EMI calculation, the reducing balance method might be considerably cheaper in the end. The total amount paid as interest in this method is usually lower than that of the flat interest rate since the principal amount gradually reduces over time. Let us understand this concept better with an example: Similar to the previous example, let us assume that the principal amount of a car loan is Rs.4 lakh, the interest rate is 10%, and the loan repayment tenure is 5 years. Therefore, the EMI to be paid using the reducing balance method will be Rs.8,499.
- 0% finance scheme – This method is also known as the Zero interest scheme. In truth, such schemes do not exist in reality. Therefore, it is wise to be aware of companies that claim to offer loans under this scheme. Even though a car company claims to offer loans with 0% interest, chances are that they are paying an upfront amount to the bank through a subvention scheme. However, you can ask the car company for a cash discount for the same amount instead.
Car Loan EMI – Reduction in Repo Rate
There is some good news for people who are paying an EMI towards a car loan. EMIs which are paid towards a car loan shall see a reduction as the Reserve Bank of India reduced repo rates by 25 basis points and it now stands at 6%. This means that the cost of credit which is required by an individual who intends on making a big-ticket purchase will further decrease.
