thanks to car loans now you don't need to pay huge money at one go to buy your first car. depending upon your income, you can apply for a car loan and drive home your dream car sooner than expected. your car loan approval depends on a lot of factors such as - your income, income-to-debt ratio, credit score report, etc. the loan tenure and the loan amount are some of the other important things that affect your car loan application.
nowadays, many banks and NBFCs offer car loans at an attractive rate of interest with low processing fees and higher repayment tenure. with an equated monthly installment (EMI) facility, you can make the car loan repayment comfortable without disturbing your monthly budget. but before you apply for a car loan, it is highly recommended that you do a proper loan planning exercise to estimate the EMI, total interest payment, and overall cost of the car after financing.
car loan EMI calculation
you can calculate the car loan EMI by using the formula provided below:
EMI amount = [p x r x (1+r)^n]/[(1+r)^n-1]
p stands for the principal amount or the loan amount required to buy the car
r stands for the rate of interest at which the loan offered by the bank
n is the number of months given for the repayment of the loan
manual calculation of car loan EMI can be complex and time taking. to make the car loan EMI calculation easier and faster, you can use the CRED car loan calculator. it is a free online tool that will help you get error-free results while planning to apply for a car loan. to calculate your car loan EMI, you just have to enter the three variables - principal amount, rate of interest, and tenure of the loan - and the CRED car loan calculator will instantly display the EMI, total interest, and total repayment amount.
how to use the CRED car loan EMI calculator?
you need to click on the CRED car loan EMI calculator link provided above, enter the loan amount, rate of interest, and tenure of the car loan. the CRED car loan EMI calculator will automatically display the estimated EMI applicable for the loan tenure.
benefits of using the CRED car loan calculator:
- it's an easy to access online tool
- it gives instant and error-free results
- saves time and energy spent on manual calculations
- helps you estimate the EMI amount to repay your car loan
- makes car loan planning effortless
important factors that affect car loan EMI
the interest rate and the tenure of the car loan are the two important factors that decide what will be your monthly EMI. a higher interest rate means you have to pay higher EMI and vice-versa. similarly, when you increase the tenure of your car loan, your EMI reduces and vice versa. though longer loan tenure can make the repayments comfortable, you have to pay a higher interest amount.
how can you reduce your car loan EMI?
large down payment: if your car loan EMI is getting out of budget, try to make a large down payment to reduce the principal amount. lenders calculate the interest on your loan on the principal amount, hence, if you lower the principal, the lower will be your EMI.
loan prepayment: if you receive the surplus funds, make a partial or part payment towards your car loan principal amount. when you lower the principal, your EMI will automatically reduce. however, note that some lenders may levy foreclosure penalties of 1% to 5%. check with your lender before applying for a car loan.
EMI adjustment: each time your income increases, increase your car loan repayment amount to reduce your EMI burden. it's one of the fastest ways to pay off your debts.
increase tenure of the loan: you can reduce your EMI burden by increasing the tenure of your car loan. however, note that as you increase the loan tenure, the overall interest as well as the total loan repayment amount will also increase.
owning a car is not only a status symbol but has actually become a necessity for an easy and convenient commute. the availability of various car loans at lucrative interest rates has made it easier to buy the car of your choice. you can use CRED online car loan calculators to customize the loan package that suits your specific needs.