Whether it is for a work commute, running errands or exploring a new place on a weekend, the necessity of a car is undeniable. With the used and new car markets thriving, there is a wide range of options available making car ownership more attainable. Whether you are purchasing a pre-owned vehicle or a new car, it requires a huge sum of money. In such a situation, car loans step in spreading the cost into manageable monthly instalments.
However, this financial commitment involved requires careful consideration, and understanding the details of your equated monthly instalments is crucial for that. Knowing your EMIs beforehand helps you to plan your finances effectively. This will also ensure that you have a smoother and more enjoyable ride on the road to owning your dream vehicle.
How to calculate car loan EMI amount
Calculating your car loan EMIs is a simple process that requires three key components: the loan amount, the interest rate, and the loan tenure.
The formula to calculate car loan EMI is:
EMI = [P x R x (1+R)^N] / [(1+R)^N-1]
Where:
EMI = equated monthly instalments
P= principal loan amount
R= monthly interest rate (annual interest rate divided by 12)
N= number of monthly instalments (loan tenure in months)
How to use online EMI calculators
Bajaj Finance offers two types of car loans – used car loans and new car loans. If you are looking to purchase a pre-owned car, you can go for a used car loan. However, if you wish to buy a brand-new car, you can opt for a new car loan. Apart from offering these loan options, Bajaj Finance also provides online EMI calculators to help you evaluate your monthly instalment in advance. Here is how you can calculate your car loan EMIs.
Additional read: How to check car loan balance
A step-by-step guide to calculating new car loan EMIs
If you wish to apply for a new car loan, you can follow these simple steps to find out your car loan EMI amount.
- Go to the new car loan EMI calculator on our website.
- Enter the loan amount that you intend to borrow.
- Input the applicable interest rate.
- Select the loan tenure (in months) from the range of 12 months to 96 months.
- Your EMI, along with the total interest and total amount payable will be displayed.
A step-by-step guide to calculating used car loan EMIs
In case you want to apply for a used car loan, you can follow these steps to evaluate your EMI amount.
- Visit the used car loan EMI calculator on our website.
- Enter the loan amount that you wish to borrow.
- Input the applicable interest rate.
- Select the loan tenure (in months) from the range of 12 months to 84 months.
- Your EMI, along with the total interest and total amount payable will be displayed.
Factors affecting car loan EMIs
There are several factors that influence car loan EMIs. Understanding these factors will help you take an informed decision.
Interest rates: The interest rate plays a pivotal role, with lower rates resulting in more affordable payments.
Loan tenure: Another crucial factor that impacts your car loan EMIs is tenure. Longer tenures lead to smaller EMIs but higher overall interest payments.
Credit score: Your credit score significantly impacts the interest rate offered – a higher score often results in lower rates.
Down payments: Another factor that affects your car EMIs is downpayment. A larger down payment reduces the loan amount and subsequent EMIs.
