When you go out to apply for car loan, you must be aware of all the finer details to avail top loan features. However, the whole process sometimes tends to be too daunting for people who are not aware about four wheeler loan features. From interest rates, repayment plans, credit score to others, every bit of information is evaluated by the lenders to decide if they are going to offer you a loan or not.
It is time to put all your worries at rest as we are going to discuss every bit of it for your benefit.
The key pointers that we are going to cover in this blog:
- What is EMI for car loan?
- What factors impact the car loan EMI?
- 3 handy tips to calculate EMI
- Benefits of EMI calculator before applying for a car loan
- Avail paperless online loan
Let’s discuss this in detail-
1. What is EMI for car loan?
EMI or Equated Monthly Installments give the option for the buyers to pay off an equated sum every month on the selected date to cover the expenses incurred with buying a vehicle. Once the loan application is accepted, the buyers have the freedom to choose the repayment plan according to their convenience.
The money to be repaid is divided into monthly installments along with the interest rate which in totality forms your Equated Monthly Installment for the loan application.
2. What factors impact the car loan EMI?
Your car loan is subjected to due scrutiny by the lender. Several things go into deciding your monthly installments. These include:
Loan amount: It is the total amount for which the loan is applied for. The higher the loan amount, the higher are the EMI’s. Based on the credit score, an applicant might be eligible for a higher loan amount. However, one must efficiently choose the loan amount according to their repayment plan.
Down payment: It is the initial payment the applicant must pay to get financing for their car purchase. As you pay the down payment, the loan amount comes down and, also the EMI’s.
Interest rate: The lender charges the rate of interest while accepting the loan application. Interest rates have a direct impact on EMI’s. The higher the interest rates, the higher is the EMI value. Based on the Credit score, the lenders offer you interest rates.
Repayment plan: Repayment tenure is the time an applicant takes to pay off the loan. You must decide the repayment plan based on the EMI plan. As one go on to increase the repayment tenure, the EMI comes down to a lower value. However, as you increase the tenure, it might result in larger interest rates.
Make sure that you ask all the pertinent questions around the above-mentioned factors to decide on the best loan plan. This will help you understand the loan terms with better clarity and even help you find the best loan for your requirements.
3. Top 3 handy tips to calculate EMI
There are three ways by which you can calculate the EMI’s.
Mathematical formula
EMI’s are calculated with a simple mathematical formula,
A = B x IR x (1 + IR)^y / ((1 + IR)^y – 1)
where,
A = Amount of EMI payable
B = Principal amount of loan
IR = Interest rate
y = Number of installments in which the loan will be repaid
Excel Spreadsheet
You can even use the Excel spreadsheet to calculate the monthly installments. Use the PMT, a pre-defined function, with the syntax PMT (rate, nper, pv)
where,
pv = Current or principal loan amount
rate = Fixed interest rate of the loan
nper = Number of installments in which the loan will be repaid
Online Car loan EMI calculator
You can go online to access the car loan EMI calculator. All you have to do is select/provide a set of information into your loan application such as Ex-showroom price, down payment, repayment tenure, and interest rates. The automated systems generate the EMI breakdown within a few minutes.
With the online option, you can do all the necessary groundwork easily from your home.
4. Benefits of EMI calculator before applying for a car loan
When you apply for car loan, it is all about being ready with the necessary aspects for a successful car loan application. A failed loan application affects your Credit score and affects your chances of getting financed for your next loan as well. It is therefore necessary that you calculate the vehicle loan EMI’s beforehand to make sure that you do not default on your repayment.
Here are the benefits of finding EMI’s before applying for a car loan:
- Efficient planning – You do not want to feel the unnecessary burden of repaying for the car loan. When you calculate EMI’s beforehand, it helps to plan your finances efficiently and choose the best plan that helps you pay off without having to look out for finances on the date of paying the EMI’s.
- Getting your application accepted – You have to be at your confident best when you apply for a car loan. And nothing boosts your confidence better than getting informed about the EMI’s beforehand. The chances of getting a loan application are significantly improved when you choose an efficient repayment plan by finding out the EMI’s.
- Better equipped at negotiating – You can choose the best repayment plan when you are aware of the EMI’s. You can ask for manageable repayment tenure and even look out for grace periods to ensure that you do not default on the loan payment.
- Maintain proper Credit score – With every successful loan application, your credit score is improved and a failure to secure a loan affects your credit score badly. So, make sure that you use the EMI calculator to find out the EMI’s for a successful loan application and maintain a proper Credit score to secure a loan next time as well.With benefits as such, it is of no wonder that applicants find out the EMI’s beforehand. This gives them the power to choose the best loan terms and conditions without having to rely on third-party assistance.
5. Avail paperless online on the go
Today, you do not have to travel around the city to visit banks or other lenders. Simply, log into your computer or smartphone to visit automobile e-commerce websites such as Droom. The company makes it easy for the users to avail paperless loan on the go.
With Droom Credit, you can
- Check EMI breakdown with car loan EMI calculator online
- Check your creditworthiness within few seconds
- Complete documentation online
- Find all the leading banks and NBFC’s under one roofSo, what are your waiting for? Go ahead, check out the EMI calculator to pay off for your dream car now!