Buying a used car used to be a financial decision that most people made with considerable angst. This has since changed after people began to buy cars on Equated Monthly instalments (EMIs) in the early 2000s. Even today, about 77-80% of all vehicles purchased in India are on EMI. However, alongside this EMI culture, the possibility of a debt trap has also emerged. People usually avoid this by calculating their EMIs before making large purchases, such as a car. This can be done using EMI calculators available online.
Benefits of Using a Car EMI Calculator
A car EMI calculator is a specialised EMI calculator designed to help you calculate your monthly payments for a car purchase. Simply enter the loan amount, interest rate, and loan tenure to proceed. These calculators can then accurately predict your monthly payments, helping you plan ahead. But is it necessary to use such a calculator? Let’s find out why.
- Accurate Loan Repayment Estimation
One of the most significant benefits of using a car EMI calculator is knowing exactly how much you would have to pay every month. Once you enter the loan amount, the interest rate, and the loan tenure, the EMI calculator provides you with an accurate EMI amount. This can help you set realistic goals for all your expenses and savings.
- Easy Comparison of Loan Options
Another benefit of using an EMI calculator is that you can compare the EMIs on car loans offered by different banks and non-banking financial companies (NBFCs). This can be vital when choosing the right car loan provider. As a result, you may be able to save more by avoiding EMIs at a higher interest rate.
- Improved Financial Planning
Everyone has a particular budget in mind when planning to take out a car loan. Using a car EMI calculator, you too can choose an EMI amount that you can easily pay off every month. This can significantly improve your financial planning. With better financial planning and a clear understanding of your monthly expenses, you can embark on a path to financial freedom.
- Saves Time and Effort
Just like a housing loan EMI calculator, a car loan EMI calculator can also help you save time and effort. Instead of contacting several banks and speaking with multiple bank representatives about probable EMI amounts, you can use this EMI calculator on your own. This can be highly convenient, as you no longer need to interact with loan managers; instead, you can quietly compare car loans offered by different banks and NBFCs by checking the potential EMIs for each.
- Helps Determine an Optimal Loan Tenure
A car EMI calculator can also be used to determine the most suitable loan tenure. For example, you have a fixed budget that you are willing to dedicate every month towards a car loan EMI. In such a case, you can use this EMI calculator to adjust the loan tenure to achieve your desired EMI amount. This also gives you better control over your financial planning.
- Ensures Transparency in Loan Processing
Finally, one of the more underappreciated benefits of calculating car EMIs using an EMI calculator is that you gain a deeper understanding of the various components of a car loan. Using an EMI calculator, you can visualise how the EMI changes as the loan amount and tenure increase and decrease.
Plan Your EMIs Before Taking a Car Loan
To sum it up, a car EMI calculator can be an excellent tool for potential car buyers. Using this calculator can not only give car buyers a clear idea of how much EMI to expect each month but also help them achieve more financial freedom. Even if you are not planning to buy a car soon, you can still use an EMI calculator to learn more about how the different aspects of a car loan, such as principal, loan tenure, interest rate, and EMIs, are interdependent.