Owning a big car is a dream of many, but to cherish this dream one needs to have a good amount of money to pay upfront. As having that much amount is not feasible for many due to many factors like growing needs, inflation etc., the other option is to opt for a car loan. Most of the banks today offer car loans and one can use the HDFC car loan EMI calculator to know what an EMI would come to beforehand. This helps in understanding whether you would be able to afford it or not.

Why One Needs a Car Loan?

Paying for your dream car just from your savings is mostly not feasible and at times not advisable too. This is because you would like to buy a car in your prime and then you have just started with your job and don’t have enough savings. Also, the responsibilities keep increasing resulting in fewer savings and more liabilities. Even if you have enough cash to pay upfront, it is not advisable to give it all as a car is never an asset but a liability. You should instead invest your savings to earn better returns on it.

The best way to own a car is to go for a car loan, but then you should be intelligent enough to know the entire process of getting the loan at the best rates. You should also be smart enough at managing your EMIs. There are instruments available in the market like EMI calculator for a car loan in India or the car loan calculator India that will help with it.

Comprehensive Understanding of Equated Monthly Installment

Equated Monthly Installment or EMI, as it is referred to, is the fixed amount that one needs to pay each month throughout the loan tenure. It includes a part of the principal amount and the interest component. Initially, the interest part is more than the principal, but as the tenure advances, it reverses. The EMI amount is dependent on three factors:

  1.   Loan Amount: The higher the amount you require, the higher will be the EMI and vice versa.
  2.    Tenure of Loan: The longer the tenure, the lower will be the EMIs.
  3.  The rate of Interest: This varies from bank to bank, but generally they fall in the same bracket. One needs to do a little research to get the best rates.

Let’s say your research says that HDFC Bank will offer you the best interest rate. You can then make use of HDFC car loan EMI calculator, which is available for free online to calculate the EMI amounts inserting the loan tenure, rate and amount. As the rate remains fixed and more or less the amount required by you will also be fixed, all you can do is alter the tenure to arrive at an EMI amount that best suits you.

Why Do You need to Calculate EMIs in Advance?

The crucial decision of opting for a particular car loan is solely dependent on the EMI today. It is the affordability of EMI that decides whether one can go for a particular car or not. Thus, it is important to know the amount of EMI in advance and for that one requires car loan EMI calculator. Making use of this simple tool you can arrive at an EMI amount instantly. EMI can also be calculated using a mathematical formula.

Read Also: Calculate Your Car Loan EMI with ICICI Car Loan EMI Calculator

But, calculating using a formula is tedious for most people and hence people prefer using the HDFC car loan calculator. One can not only find the EMI amount but also can make use of HDFC interest calculator to see how much interest he or she will pay during the entire tenure. Knowing exactly how much a loan will cost by the time you repay it fully helps in taking an informed decision.

If you can afford a higher amount of EMI, it is always recommended to go for a higher EMI for a shorter tenure. This way, the interest outflow gets reduced.

Step-up Car Loan Scheme

As the person gets into a job, his responsibilities increase and so does his salary. Thus, as time passes by, you are in a better position to go for higher EMIs than you were in the initial years. Keeping in mind this aspect, HDFC bank has an option of Step-up Car Loan Scheme. Using the HDFC car loan EMI calculator, you can see what amount you are comfortable paying right now and assuming a higher salary in the years to come you can figure out the amount of EMI that you would be comfortable paying later. In this step-up scheme, you start repaying with a lower EMI, which gradually increases as the years go by.

You must have figured it out with all the discussion so far that the preference for EMI is subjective. You can go for a short-term or a long-term EMI or you might even opt for upfront payment if you have enough resources. But, for most of the people, a car loan is the best option to go for their dream car and for them evaluating the amount of EMI using a car loan EMI calculator is indispensable.

Author Since: Jan 17, 2019

Anoop Bansal, a professional Chartered Accountant based in the National Capital - Delhi. I have worked for the top-notch Indian and International banking firms for the past 10 years. Currently, I work at emi-calculator.loan blog and a financial consultant for different SMEs in India. Follow me on Facebook, Twitter and Linkedin for more information.

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