How You Can Know Your Car Loan EMI in Less Than a Minute

When you are choosing a car loan you need to keep in mind that the EMI required to be paid each month is affordable. When the bank is providing a loan they try to ensure that the EMI payable each month is no more than 40 percent of the total salary the borrower earns. When the applicant is applying for a car loan they need to keep in mind certain factors. Firstly, one should calculate a budget for the new car they wish to purchase and stick to it. Secondly, the factors that affect an applicant’s EMIare the principal loan amount, the interest charged by the bank and the tenure of the loan.

If one wishes to calculate their EMIs they can simply use the car loan EMI calculator which most banks provide online. It is better to use an EMI calculator than to calculate the EMI on your own. The reason being that the EMI calculator is more accurate and provides a more in depth knowledge about the interest and principal amount break up in each EMI. Another benefit of the EMI calculator is that it is quick and a borrower can check it form anywhere in the world. The process is extremely convenient for the borrower as it has easy access.

The EMI payable can be affected by certain factors such as down payment and the interest rate. Before you start calculating the EMIs you must deduct the amount you will be required to pay as down payment on the car. When a bank issues a car loan it does not issue the entire cost of the car as a loan to the borrower. Most banks require the borrower to put in at least 20 percent of the total amount. So when you are calculating EMIs you must deduct this amount.

Another component that plays a great role in the calculation of EMIs is the interest rate charged. The car loan EMI calculator can only charge EMIs based on the interest rate you put in. For those who have opted for a floating interest rate, they need to calculate a pessimistic amount and an optimistic amount. The pessimistic amount of EMI will be based on the highest the interest rate can possibly reach that month. An optimistic amount of EMI is based on the lowest the interest rate can fall that month. This allows one to be prepared for a worst and best case scenario.

It is vital that a borrower uses the car loan EMI calculator to help calculate their EMIs accurately. It is advised that the borrower do this before the loan has been sanctioned so that he can plan in advance on how he plans to repay the loan.