You will need to make sure that you know the very specific amount of money that you’ll be sending each month in case you plan on buying a car on loan. A car loan EMI calculator will be helping you with this. It is a very useful tool that will assist you in reaching your own financial status so that you could make an educated decision before signing up for obtaining a loan. A car loan EMI calculator will assist you in calculating how various car loan interest rates and loan terms would affect your monthly outgoings. In this article, we’ll discuss why using a car loan EMI calculator is one of the best tools for your budgeting strategy.
Precise Monthly Payment Estimation
The greatest advantage of availing the services of a car loan EMI calculator is that it provides you with a correct notion of how much your monthly installment would be in terms of the loan amount, interest rate, and loan term. The calculator simply calculates all these factors in consideration and provides you with an exact notion of how much your EMI would be when you input your details into it.
Absent such a utility, you would be forced to make an estimate or calculate the EMI yourself, an exercise that is time consuming and based on approximations. Car loan EMI calculator removes such uncertainty by giving you clear-cut answers right away. Possessing such knowledge of your monthly EMI upfront, you can plan your finances accordingly and need not fret about shocks when the loan gets sanctioned.
Enables You to Budget Your Cost Better
When it comes to car loan interest rates, they help you determine how much you would be spending over the length of the loan. Various interest rates cause your monthly payments to fluctuate as far as their size is concerned, and a car loan EMI calculator helps you to see the changes.
For instance, if you wish to view loan amounts of ₹5,00,000 or ₹8,00,000, you can enter these amounts as inputs in the EMI calculator and try out various interest rates (e.g., 7%, 9%, 12%) and tenures (e.g., 36 months, 60 months, 72 months) and observe how your EMI will change. By doing so, you can check what loan amount, rate of interest, and tenure will be affordable for you every month.
By using the application of the calculator, you can determine the terms of the loan based on your ability to pay and not borrow a loan whose repayment will put pressure on your budget.
Assume the Total Loan Repayment
In addition to calculating monthly payment, automobile loan EMI calculators also give you a notion of how much you are going to be paying over the loan period. You get to see the amount that you would be paying altogether—interest + principal—if you opt for a certain loan sum and rate of interest.
Suppose you take a ₹6,00,000 loan for 5 years at the rate of interest of 9%. Your calculator will tell you how much interest you need to pay and what amount you’re borrowing. It’s worth memorizing this because it shows you the actual price of borrowing and how the auto loan interest rate affects your purse.
If the repayment amount seems too high, you may try other loans or terms that give you a better payment plan.
Choose the Right Loan Term
An auto loan EMI calculator helps you to try out different terms of the loan (the period for which the loan must be repaid) and observe how different terms impact your monthly installment. Although a longer term gives you smaller monthly installments, it also costs you more interest in total over the years. Shorter terms give you bigger monthly installments, but you pay less interest in the long term.
For instance, if you calculate your EMI for a period of 36 months, you will see that the EMI for a period of 72 months is more. But if you cut down the period, then you can save an enormity of interest over the loan tenure. Car loan EMI calculator enables you to compare such situations so that you can make a smart decision regarding the loan tenure that is most suitable for your month-end finances as well as long-term personal finance requirements.
Compare Different Lenders and Deals
One benefit of a car loan EMI calculator is that it enables you to compare various car loan interest rates offered by various lenders. Various banks, financial institutions, and online lenders offer varying interest rates, and the EMI calculator enables you to enter rates from various sources such that their effect on your monthly expenditure can be compare.
By comparing the results, you will be able to understand which lender is providing the best combination of car loan interest rate and loan term most suitable for you. This is especially important since a marginal difference in the car loan interest rate can create a significant impact on the EMI per month. The car loan EMI calculator assists you in making the right choices while choosing your lender and makes you get the best deal.
Avoid Over-borrowing and Make It Pocket-friendly
Over-borrowing is one big error in taking a car loan. At times, the temptation to buy a costly car might make you borrow money more than your pocket can afford. Using the car loan EMI calculator will prevent you from this by calculating the amount of loan that comfortably fits your pocket every month.
For instance, if the EMI calculator tells you that the EMI on a ₹10,00,000 loan is beyond your means, you can decide to take a lesser amount, purchase a low-cost car, or make an increased down payment. This keeps you at ease and does not take too much debt that may lead to repayment troubles in the future.
Enhance Financial Awareness
With the aid of a car loan EMI calculator, not only is the technicality of payment calculation made simpler but you also become an empowered individual as to the nature of loans. You grasp the interconnection of car loan amount, car loan rate of interest, and the term of the loan. Therefore, you will be more aware of how your loan request will be assess by the lender and on what grounds will be the payment terms.
For example, you will know how your month’s EMI would be impacted by changes in car loan interest rates and the loan tenure. This will help you make better financial decisions, whether negotiating with banks or planning future car loans.
Prevents Financial Stress
Financial burden usually arises due to the lack of adequate planning for future payments. By pre-planning your EMIs, a car loan EMI calculator helps you find out if you would be able to pay the car loan instalments without exerting much pressure on your finances. Using a car loan app that includes an EMI calculator can further simplify this process, giving you instant access to EMI breakdowns anytime, anywhere. It is a preventive measure that saves you from getting unpleasant surprises and allows you to settle your dues without much stress.
Conclusion
A car loan EMI calculator is an absolute necessity for all those who intend to go in for a car loan. Through the calculator, you would understand your monthly installment, the sum to be paid, and how an interest rate on car loans works for you. Substituting numbers in the calculator, you can try different combinations of the loan taken as the amount, interest rates, and tenor and find the optimum combination. The calculator helps you to budget your money more efficiently, reminds you that you should not take a big loan, and enables you to compare the rates of different lenders so that you can make the best choice. Finally, it is a reasonable choice for every car purchaser to use a car loan EMI calculator in order to take a loan based on his or her financial objectives.
