Purchasing a vehicle is not a day-to-day activity nor a child game! It involves immense preparation and a decent amount of investment to own your own vehicle. Generally, people do not walk up to a showroom any day and purchase a car from his/her own pocket.
First, you must understand your requirement and preference. Is it for your own convenience or for the whole family? Are you a two wheeler person or want to drive a four wheeler?
Second, you need to focus on the price of the vehicle. Does the price of the vehicle suit your pocket or not? If you are unable to pay the whole amount at one go, you can surely take the support of financing from any bank or NBFC.
But you should not apply for a loan blindly. There are several factors that need to be taken care of.
- Fix the loan amount
- Check how much EMI your income permits you to pay each month
- Use vehicle loan EMI calculator beforehand to check the exact amount of EMI
- Review other factors – eligibility criteria, interest rate and additional facilities provided
- Apply for the loan
Applying for a loan is not the first step of any loan application. The few steps before that are equally important as they will help you to avoid being a defaulter. The usage of an auto loan calculator is one of the most significant among them. Vehicle loan EMI or Equated Monthly Installment is the fixed amount of money that you are supposed to pay to the lender to repay the loan amount until the loan matures. An auto loan is sanctioned to you when you agree to pay a certain amount of interest to the lender. Based on the per month interest rate, the total interest is calculated. The interest along with the principal amount is collected from the applicant in the form of Equated Monthly Installment (EMI).
Factors that influence the EMI are the loan principal, the rate of interest and the tenor of the loan. So, a negligible change in these factors can bring a huge impact on EMI. An applicant usually tries to make the EMI affordable, so that, he/she can easily manage the finances every month. To get a lower EMI, you should opt for lower loan value, lower interest rate or longer loan tenor. But always remember a lower EMI may also imply higher interest payment in total.
To estimate your monthly loan EMI, you can either calculate manually with the help of the basic formula of EMI calculation or you can take the support of an auto loan EMI calculator:
The basic formula of EMI calculation:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
Here, E – EMI of the vehicle loan, P- Loan principal, R- Rate of interest, N – Loan tenor
But manual calculations can bring many unexpected errors that can completely ruin your monthly budget. So, the easiest way will be to take the support of an online loan calculator, which will assist you to get the EMI value, total interest payment as well as the total amount payment within the whole tenor of the loan, within seconds. When it comes to vehicles, it can be a car or a two wheeler. So, even if you are planning to purchase a motorcycle or a car, you can use bike or car loan EMI calculator and get the exact value of EMI. The best part of using such calculators are you will not waste time and effort in manual calculations, and you will get the most accurate present value and other potential values by making as many alterations of inputs you want to.
In this way, you will able to settle down with the right EMI amount that will be easy for you to pay per month as well as you cover the maximum portion of the vehicle cost within the loan amount. Henceforth, you can confidently forget the fear of being a defaulter.
Jhelum is a blogger, who has an experience of writing in all verticals and has good command over SEO and designing as well. She specializes in automobile and finance related topics. She has a prominent existence and well participation on different social media platforms.