Buying a car for the working middle class is expensive. The purchase of a new car or a used one involves a lot of expenditures which is something an individual from the middle class cannot afford. Thus, with the introduction of car loans by financial institutions customers can carry out the purchase of a new car without any hesitation. A car loan is a loan product provided by financial institutions to the customers for the purchase of a car. The purchase of a car through a car loan can have a lot of benefits for the customer. A financial institution will provide the customers with the loan amount for the purchase of the car. Through a car loan, customers can purchase a better car than the one available in their budget.
One of the benefits of a car loan is that the car purchased is considered as a collateral, so the customer does not have to provide any other type of collateral to the financial institution. In a car loan, the loan amount is provided to the customers at a certain interest rate. The customers then need to make the repayment on the loan within a set tenure period. Repayment on a car loan is done through equated monthly instalments (EMIs). The monthly instalment repayments on a car loan reduce the burden on the customer. However, if the customer fails to make any of the repayments on the car loan, the financial institution has the complete right to seize the car. Generally, the interest rates on a car loan are fixed interest rates, which mean that the customer needs to pay a fixed specific amount throughout the tenure of the car loan.
Since the customers make repayments through equated monthly instalments, the customer decide on the tenure period for the loan and the monthly instalment they will have to make. A customer can use a car loan EMI calculator for the calculation of the monthly instalment amount. EMI calculators are available on the official websites of the financial institutions.
Car loan EMI calculator:
A car loan EMI calculator is a calculator tool available on the official website of a financial institution. Through these calculators the customers can enter the vital information regarding the loan and get an estimated amount that they will have to pay as monthly instalments. A car loan EMI calculator will help the customer decide and choose the right amount for the loan in a way that it doesn’t affect their daily expenditures.
In a Car loan EMI calculator, the customer inputs some basic aspects of the loan, like the tenure period, interest rates, loan amount. The calculator functions on a formula that is designed to find the monthly instalment that will best suit the customer. The calculator is easy to use without any difficult operations. The customers just have to provide some basic information and they will get an accurate amount that they need to pay as a monthly instalment.
Car loan EMI calculator formula:
E = P x R x (1+R)^n/{(1+R)^n – 1 }
E – Stands for EMI you owe on car loan amount
P – Principal amount
R – Interest rate on car loan
n – Tenure of the car loan
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