Car Loan EMI Calculator

What is a Car Loan EMI Calculator?

A car loan EMI calculator is a financial tool for calculating the monthly EMI on a loan to purchase a vehicle. It calculates the EMI based on various inputs such as loan amount, the interest rate at which the loan is taken and the duration of the loan. Combining all these factors using the car loan EMI calculator formula gives you a clear picture of how much amount you need to pay each month.

To use the Pocketful’s Car Loan EMI calculator, one needs to enter the following inputs:

1. Loan Amount
2. Rate of Interest
3. Loan Tenure

The Car Loan EMI calculator gives output in the form of

1. Monthly EMI
2. Principal Amount
3. Total Interest
4. Total Amount (Principal Amount + Interest)

This calculator helps you calculate the Monthly EMI of a loan taken to purchase a Car.

How can a Car Loan EMI calculator help you?

The car loan calculator helps an individual make informed decisions while planning to purchase a car in the following ways:

1. EMI: A car loan EMI calculator helps you calculate the monthly EMI and can help you plan your monthly budget effectively.
2. Recalculations: Using a car loan EMI calculator, one can experiment with different interest rates and other inputs to check how they affect the EMI amount.
3. Loan Tenure: Through a car loan EMI calculator, one can check the impact on the EMI for different loan tenures.
4. Cost Analysis: One can calculate the total interest paid in addition to the principal amount of the loan and then calculate the actual cost of financing your car.

How does a Car Loan EMI calculator work?

A car loan calculator helps an individual calculate the car’s financing cost. Here is an explanation of how it works:

1. Input Data: The first step in calculating the car loan EMI is to input data such as loan amount, tenure of loan, and interest rate at which the loan is taken.
2. Formula: The formula will be applied to calculate the EMI of the car based on the input provided earlier.
3. Getting Results: Once the formula is applied successfully, you will get the result on the screen, which shows the monthly EMI, along with the total interest amount and total amount to be paid.

How to use a Pocketful Car Loan calculator?

You can easily calculate the EMI of your car loan through the Car Loan EMI calculator offered on the Pocketful website; the steps to use the same are as follows:

1. To calculate the EMI of your car loan, the first step is to visit Pocketful’s website.
2. Then, you need to scroll to the bottom of the home page; there, you will find a section named Tools; click on it.
3. Then, the financial tools page will appear, where you will find a tab named Financial Calculators; click on it.
4. Then you see an option named Car Loan EMI Calculator; click on it.
5. Enter the details such as Loan Amount, Rate of Interest, and Loan Tenure.
6. Once you enter the details of your loan, the calculator instantly calculates the monthly EMI to be paid, the total interest, and the total amount.

Formula to Calculate Car Loan EMI

Formula to Calculate Car Loan EMI

The formula to calculate the EMI of the car loan is:

EMI = [ P * R * ( 1 + R ) ^ N ] / [ ( 1 + R ) ^ N – 1 ]

EMI	Equated Monthly Installment
P	Principal Amount of Loan
R	Interest Rate of Loan
N	Loan Tenure in Months or Number of Monthly Installments

Let’s understand it with an example.

Mr. A decided to purchase a car worth ₹10,00,000, and he approached a bank that offered him a loan of the same amount at an annual interest rate of 6.5% for a tenure of 5 years.

Now, let’s calculate the monthly EMI that Mr A needs to pay.

In the case of Mr A, the following are the inputs

• Principal Amount of Loan: ₹10,00,000
• Interest Rate of Loan: 6.5% P.A.
• Loan Tenure: 5 Years
• Converting the annual interest rate of the loan into a monthly interest rate: 6.5%/12 = 0.00541
• Converting the Yearly Loan Tenure into months: 5 years * 12 = 60 months

Using the formula of the Car Loan EMI Calculator and putting the values in it:

EMI = [ P * R * ( 1 + R ) ^ N ] / [ ( 1 + R ) ^ N – 1 ]

10,00,000 * 0.00541 * (1 + 0.00541) ^ 60 / (1 + 0.00541) ^ 60 – 1

Your Monthly EMI will come to around ₹19,566 per month.

The amount of interest will be calculated as follows:
Monthly EMI * Tenure in Months – Principal Amount
= 19,566 * 60 – 10,00,000

Hence, the amount of total interest which you need to pay will be ₹1,73,969

And the Total Amount Payable = Total Interest + Principal Amount
= ₹1,73,969 + ₹10,00,000
= ₹11,73,969

Therefore, Mr A has to pay a monthly EMI of ₹19,566 for 60 months, which amounts to ₹1,73,969 in total interest on the loan and the principal amount of ₹10,00,000

Benefits of using the Car Loan calculator

The major benefits of using the car loan EMI calculator are as follows:

1. Comparison: One can easily compare the EMI offered by different banks by adjusting the interest rate, tenure, and loan amount, enabling them to choose the most cost-efficient option.
2. Convenient: One can easily save time and effort using the EMI calculator available online.
3. Affordability: An individual can check the estimated EMI amount before taking a loan, which helps them plan their expenses according to the budget.
4. Negotiating: Having an estimated EMI amount of the loan by your side helps you negotiate with the banks or financial institutions.