Riding a car with friends is what we all want to experience on most occasions. But even more important is to remove the hassles of public transport in our day-to-day run from home to office and vice-versa. How can you do that? By buying your own car. For that to happen, you may have to apply for a car loan. Paying the full price of the car may not be feasible for most as it requires to cough out lakhs to crores at one go, depending upon the models one chooses to buy.
A car loan is inevitable so does the cost that comes with the same. The costs of EMI, interest, and others are important considerations for an enjoyable car loan journey. You can calculate all that. Do you know, how? Any answer, buddy? Don't know. It's the car loan calculator that will do all the calculation for you. So, let's get started with the nitty gritty of car loan calculator.
What is Car Loan Calculator?
Car Loan Calculator is a simple tool to find 'What' and 'How' of a car loan. In simple words, it defines the actual cost to be borne by a borrower towards a loan. But the definition of car loan calculator does not end here. It also says how much loan can you get for your dream 4-wheeler. Further, it demonstrates as to how much you have to pay on interest and principal portions year-on-year till the expiry of the loan tenure.
Types of Car Loan Calculator:
Based on the variations in functions, there can be different car loan calculators. Basically, these include Car Loan Eligibility Calculator, Car Loan EMI Calculator, and Amortization Calculator. Let's discuss each of them separately.
Car Loan Eligibility Calculator:
The eligibility calculator determines the amount of loan a lender can disburse you based on your income and savings. Well, the general rule says, more the income greater will be the eligibility. But as different people can have varied saving patterns, the loan eligibility can be higher or lower than one expects to.
For example- You earn a salary of ₹ 30,000 per month and save upto ₹ 12,000. The calculator will initially calculate the per lakh EMI on the existing interest rates and the longest repayment tenure. Suppose if you apply for a car loan at SBI, which offers an interest rate of 9.20%-9.25% per annum for a maximum period of 7 years, then per lakh EMI will be 1,619-1,622.
The loan eligibility will be calculated via a formula as shown below.
Loan Eligibility- ₹ 1,00,000 x savings/per lakh EMI
- ₹ 1,00,000 x 12,000/1,619= ₹ 7.41 lakhs
- ₹ 1,00,000 x 12,000/1,622= ₹ 7.39 lakhs
So, expect to receive a loan worth ₹ 7.39 lakhs-7.41 lakhs to buy your favourite car.
Car Loan EMI Calculator:
The EMI calculator or say interest calculator will indicate the repayment amounts in terms of principal and interest each month. EMI, an abbreviated form of Equated Monthly Installment, consists of both principal and interest amounts payable towards the loan. There is a formula below by which you can calculate the EMI.
[ P x R X (1 + R) ^ N] / [ (1 + R) ^N – 1]
P= Principal Amount
N= Number of Monthly Installments
Let us take an example to understand the function of the calculator.
Example- Shivam wants to apply for a 5-year car loan of ₹ 7 lakhs at HDFC Bank, which offers him the same at 9.65% per annum based on his eligibility. The indicative EMI will be ₹ 14,753, while interest outgo and overall repayments are expected to be ₹ 1,85,760 and ₹ 8,85,760.
Car Loan Amortization Calculator:
The amortization calculator enables you to get an idea of the interest and principal repayments, while also indicating the outstanding balance of the loan each year. The year-on-year track of loan repayments can help you plan your loan journey better.
Benefits of Car Loan Calculator:
The benefits of car loan calculator can be gauged from the points below.