A car loan EMI calculator can help you through the process of deciding the model of the car to the planning for your monthly budget to make the car loan EMIs affordable. Many banks, financial institutions and websites of third party loan comparisons offer this calculator.

Below are given some benefits of using this calculator:

• This is a hassle free and easy to use tool which helps you to know the amount of your prospective or monthly instalment.
• You are supposed to input details such as the amount of loan, interest rate and repayment tenure. You will then get to know the monthly instalment amount and your amortization schedule.
• Any processing fee can also be entered in this calculator. The fee will be added in the amount of loan and total expenses to bear will be shown.
• By entering the details like prepayment amount, frequency and penalty, you can understand what effects prepayments have on EMI over the tenure.
• You will also get to know the loan repayment timelines and total interest to make you able to take smart repayment decisions.
• You can know the impact of interest rate and tenure on EMI. Check the rates and tenure to choose the affordable EMI.

This calculator first calculates the compound interest on the principal loan amount according to the interest rate given. The calculation generally takes place along the lines of these rules - on total payable amount, first pay the interest component and the part remaining of the EMI is the principal.

Below given is the mathematical formula used for computing the EMIs:

EMI Amount = [P x R X (1 + R) ^ N] / [(1 + R) ^N - 1]

Here, P stands for principal loan amount, R stands for interest rate and N stands for number of instalments (monthly). If the yearly interest rate is 12%, then the monthly rate of interest will be 12/ (12 x 100).

Do check our car loan eligibility calculator for knowing your loan eligibility.

You can eliminate the errors which can occur during manual calculations and obtain accurate result by using an online car loan EMI calculator.