Car Loan Calculator
A car loan, also known as an automobile loan, is disbursed by banks and financial institutions to buyers for a stipulated time for the purchase of a car. A car loan EMI calculator is a handy online tool where users can enter the loan amount, number of months and the interest rate to get the estimated EMI amount.
Benefits Of Using An Online Car Loan EMI Calculator
By using a car loan EMI calculator, one can understand the monthly payments or EMIs on a car loan. The calculator shows all the details of the loan, such as principal amount repayment and total interest amount to be repaid to help consumers make an informed decision.
While the EMIs for a car loan are lower if one selects a longer repayment period, the interest cost would be higher. One can pay off their auto loan faster by choosing a shorter term. However, the EMIs for a car loan are somewhat hefty when a short tenure is chosen.
What Is The Interest Rate On A Car Loan?
New car loan interest rates vary from one lender to another. These have annual rates as low as 7 per cent with a maximum repayment term of 7-8 years. Several major financial institutions provide car loans at competitive prices, and it is wise to analyse which of those offer the lowest car loan interest. That is where a car loan calculator comes in handy.
A 7 percent annual interest on a car loan is an extremely competitive rate as the borrowing costs have risen substantially. With most lenders, that would be the lowest interest rate on a car loan.
Can A Car Loan Be Paid Off Early?
Paying off a car loan before term is a smart move as it reduces financial liability. However, lenders sometimes charge a prepayment penalty because they receive less interest when a loan is paid off early. One may use a car loan calculator to understand if there will be any saving of interest on early payment and how much.
In the case of part prepayments, it is best to make sure that any additional payments you make go toward the principal. Instead of reducing the prepayment against the principal amount, financial institutions can divert those payments toward other costs like interest. Also, if you pay extra either as a down payment or a part prepayment of your loan's principal, the EMIs will be lower as the amount you owe as a whole also comes down.
There is a direct correlation between the down payment and the EMI amount because the higher the down payment, the lower the amount borrowed and hence smaller EMIs. Similarly, if you make part prepayment toward your principal, the outstanding money borrowed comes down and one can restructure their car loan to bring down the EMIs or the tenure.
