To buy an automobile, you can obtain a car loan, which is a type of unsecured advance, from a variety of financial institutions. With the rapid decrease in interest rates in recent years, credit cards have become more popular than ever because they enjoy a higher rate of reputation.
Equated monthly instalment (EMI) is a form of collateral that enables a borrower to make set monthly payments from his or her checking or savings account to a creditor.
As the EMI includes both principal and interest, the loan is fully repaid over time, and the interest is added to it every month. In order to comprehend how an EMI works, we first need to understand what an EMI is.
The primary difference between flexible payment arrangements and EMIs is the way in which they are structured, which is entirely different.
Flexible payment arrangements do not have the same meaning as EMIs. When choosing flexible payment arrangements, the borrower might decide to pay a larger amount of their choice.
In most EMI programs, there is usually only one payment that can be made per month per borrower. The ability to calculate EMI in advance allows borrowers to plan ahead, knowing how much they need to pay every month in order to pay off their loans, thus making it easier to plan their funds in their personal lives.
A loan interest provides a predictable and consistent stream of income to the lender, allowing for a consistent and reliable income stream.
It goes without saying that as soon as the borrower makes a prepayment during the course of the loan, either the loan EMIs that need to be paid in the future will be brought down or you may choose to shorten the length of the original loan or you may do both at the same time.
There is an alternative scenario whereby the borrower skips an EMI during the entire term of the loan, either due to an EMI holiday, a check dishonoured or bounced, or an insufficient balance when the borrower opted for automatic EMI deductions or defaulted, in the event that the borrower skips an EMI.
This will either result in a higher EMI for the subsequent periods, or in terms of the loan's tenure being increased, or it may result in a combination of these two things, in addition to any financial penalties applied.
One of the leading banks in India is HDFC, which is one of the most prominent financial institutions in India, providing these loans at very competitive interest rates since it belongs to one of the premier financial institutions.
The car loans offered by HDFC have a tenure ranging from 1 to 7 years, and they come with numerous benefits and a high amount of value, which make them affordable to many consumers.
Furthermore, the website offers a monthly repayment calculator that enables potential customers to calculate their monthly repayment obligations before taking out a loan from HDFC car loans.
How to Use an EMI Calculator For Car Loan HDFC?
If you utilise the EMI Calculator to calculate your EMIs, you will be required to supply some basic details about yourself. Here are some of them:
- To come up with the amount of loan you are requesting, you can use the pointer on a scale to drag it up to the level you want.
- The loan duration is determined by the position of the pointer on the scale.
- HDFC Bank offers an interest rate on car loans that is much lower than those offered by other banks.
- Enter the processing fee that the bank is charging you for the loan.
- If you choose to prepay, you have two options:
- The section below presents you with the option to choose whether or not to make a prepayment, and then select the appropriate option and click on the 'Calculate' button.
On the page that you will receive, there will be a breakdown of how much you will have to pay. Along with the breakdown, you will also find details on your loan and how it will be amortised.
- You will need to provide additional information if you wish to make prepayments, such as the following:
- The frequency of prepayments.
- The amount of the prepayment.
- The prepayment fee.
- The manner in which the prepayment will be applied.
- Upon clicking on the 'Calculate' button, you will be able to see a detailed breakdown of everything you will have to pay for. The page will also show you a graph of the loan details as well as your amortisation schedule.
Furthermore, this tool also offers you some information about the amount and tenure of the loan, with and without the option to prepay.
Advantages of using the EMI Calculator For Car Loan HDFC
With a market capitalization of more than $10 billion, HDFC is the country's largest bank by market value and it is also the biggest lender by assets of all private sector banks.
The reason is quite simple: these advances offered to you by the financial institutions come with a host of benefits making them very advantageous for you as a borrower.
It is no surprise that HDFC Car Loans are among the most sought-after loans within this category. That is because they have exceptionally low-interest rates, allowing the borrowers to repay the loan at a lower amount.
In order to be better prepared to manage their future finances, individuals should calculate their EMI amounts before applying for a loan advance.
For this reason, the HDFC car loan EMI calculator could be of great assistance to you when it comes to knowing the monthly payment amount and can provide you with the following benefits:
- The calculator enables individuals to determine the amount of money they could afford to borrow based on their income.
- For individuals, it helps them to choose a payment term that will be convenient to them and work toward ensuring that they can repay the advance without any hassle.
- In addition to eliminating all room for any error, the HDFC car EMI calculator also eliminates the need for individuals to carry out manual calculations, which can be a tedious task.
- It can be used from any device including mobile.
EMI Calculator For Car Loan HDFC can be used to calculate car EMIs and individuals may be able to enjoy several benefits. Some of them include the following:
- In addition, it provides accurate results and saves the borrower's time by eliminating the need to calculate the EMI amount manually.
- Using this application you can get something based on the fractional interest rate provided by the bank.
- There is an HDFC car loan EMI calculator which is available 24x7 and does not require any registration on the part of the user.
- It ensures the security of all the data entered.
- This HDFC bank car loan calculator is an effective and easy-to-use tool that helps borrowers get a sense of what they need to pay every month for their loans. The reason for this is that, when individuals are making decisions regarding borrowing a cash advance, sound decisions are essential.
- This tool can display details such as EMI and amortisation instantly and it is very easy to use.
- It is possible to contact the customer support team in case you face any issues while using the tool; they will be able to resolve them for you.
- This tool can be downloaded for free from the website.
- An attractive chart format on the EMI Calculator for HDFC Car Loans illustrates the breakdown of the amortisation schedule and the amount payable. This makes it very easy to comprehend the EMI Calculator as well.
- Using the tool you can adjust a number of parameters until you find a combination of period and principal that works for you, as well as EMIs that you find affordable.
- If you intend to prepay a part of the loan, the tool provides the option to calculate the EMI even if the entire loan is to be repaid.
Effect of Loan Prepayment on your Installment Payments
Car loans are used more often than not to fuel the dreams of people who want to own a car because a one-time purchase such as a car could wipe out their savings if they do not have sufficient savings.
Ideally, when things look up financially or if there is a sudden influx of money, it's a good idea to settle the debts. Basically, foreclosure refers to the satisfaction of debt before a loan ends, which can be expressed as a prepayment or pre-repayment.
As a result, the bank charges the borrower a certain penalty if he pays off the loan amount well before the due date. It is common for the penalties to act as compensation for the lender in the case of not receiving the anticipated interest.
There are two factors that determine the amount of car loan foreclosure penalty. The amount depends on the amount of principal owing, how much interest is owed, and also at what point in the tenure of the loan it is being paid off.
In relation to penalty charges for prepayment and pre-closure, they can mean very different things. You are also allowed to make partial prepayments and pre-closing means that the entire loan is foreclosed before the end of the tenure.
The main thing you must keep in mind when you are applying for a loan with a certain bank is to be well informed about the prepayment clauses and penalty charges.
There are situations when prepayment may benefit you, and there are situations where it may not. If, for example, the end of the lease period draws near, foreclosure on a car loan might not be a favourable idea, since the prepayment penalty may exceed the interest due on the loan.
It is possible to calculate your prepayment penalty based on the outstanding balance of the principal of your car loan by using a prepayment calculator online.
If you desire to calculate a car loan prepayment, you must provide information such as the original loan amount, the loan start date, the tenure of the loan, the interest rate, and the penalty for early payment.
Some calculators can help you work out the amount of time left to repay your loan and the current EMI that you are currently paying.
It is possible to determine based on the information that you input how much of the principal balance will be repaid, how much interest will be saved and by how many months the repaid term will be shortened according to the car loan prepayment calculator.
When it comes to prepaying your car loan, this information will assist you in making a wise decision. For a short time, if you save more on interest than you have to pay in a penalty, you may be able to proceed with the foreclosure process.
There are two types of car loans that can be repaid in advance. It can be hard to make a distinction between partial and full foreclosures when it comes to auto loans, although some of them are more common.
Part prepayments: It is when you pay off part of a car loan or car loan payment by making larger payments than the monthly EMI of the loan before the end of the period that this is considered part prepayments.
Consequently, you will have a smaller principal outstanding as well as a smaller EMI.
In the case of full prepayment, when the loan is entirely repaid before the end of your loan tenure, it is known as full prepayment. The loan is effectively closed off at that point.
In some cases, banks refuse to allow partial prepayments under-car loans. Additionally, I strongly recommend you make sure that you are kept updated about the new prepayment schedule after you have done a part prepayment.
In order to decide to pay off your car loan, you must carefully weigh the pros and cons of foreclosure before deciding on whether or not to do so. Here are some of the things you should take into consideration before deciding on whether or not you should do so.
Taking advantage of interest savings
If it comes to prepayments, borrowers should take into account not only the tenure but also the prevailing interest rate of the car loan.
If you want to close your loan, a number of factors influence your decision, such as where you are in the payment process, whether there is a prepayment penalty and the interest rate.
Defeating Repossession Charges.
A number of factors, including the bank itself, influence the prepayment penalty for a car loan. It is important for borrowers to determine if a prepayment penalty is a flat rate or a percentage of the outstanding interest or principal on their car loan.
Borrowers need to consider the penalty amount in relation to the savings on the overall interest.
Make sure you consider all your options.
You should avoid paying off your loan unless you are sure that the money is put to good use. If there are other ways to get your money off the loan, such as investing it somewhere and creating better profits than all the interest savings from foreclosure, why do you choose to prepay the loan?
Factors that Can Impact Your Due Amount
Car ownership is more of a dream come true for most of us than owning a new car. While getting a new car is usually out of our reach financially, used cars can provide us with the vehicle that we have always dreamed of.
The price of a used car is much lower than that of a brand new car because used car financing is typically available from banks and other non-banking financial corporations. But your EMI on the used car loans is determined by several factors.
As a consumer, it is important to be well aware of these factors so that you reap the benefits long term. Therefore, if these factors work to your advantage, the EMI gets further reduced.
#1: A history of your credit rating
You must be aware that your credit history plays an important role in determining the interest rate on the loan you apply for no matter what type of loan you apply for.
If your credit score is higher (check your free credit score report), then your chances of getting the loan will increase. You can also bargain with your lender if you have a good credit history, and you will be able to get a lower interest rate so that you will have a lower monthly payment burden.
#2: How Much Income You Make?
EMIs are determined by how much you earn, and how much you earn varies from person to person.
The lender believes that if you have a high debt-to-income ratio, you may be unable to repay the loan in the future, so as a result, you are more likely to incur higher interest rates, which leads to higher EMIs.
Before applying for a used car loan, you should ensure that you have a steady job and that you have a decent income.
#3: Amounts Paid Down
There are many advantages to paying a larger amount for down payment; you will get a larger loan amount, thereby paying a smaller EMI.
There is also a correlation between paying more money for down payment and a lower interest rate, so try to save plenty of money to be paid as an initial sum before applying for a car loan.
#4: Length of the loan
It is possible to get used car loans for up to eight years. However, banks charge a high-interest rate for short-term loans and vice versa.
An example of this is if a bank charges a rate of 12.75% per annum for a loan of up to two years, the interest rate goes down to 12.25% when the repayment period is prolonged to three years. The interest rate drops to 10.75% when the repayment period is extended to seven years.
It is a good idea to realise how much interest you will have to pay for both scenarios and choose the one that is the cheapest for you. The longer the tenure, the cheaper the interest will be.
#5: The Model, Year, and What Make of the Car
As a rule of thumb, buying a car as collateral for a loan means the bank stands to recoup the disbursed loan amount if you fail to repay the debt. The logic behind this is that in case you do not pay off the loan, your car will be seized and sold to make up the difference.
Because of this, banks give consideration to the resale value and the age of a vehicle before granting any loan. Cars with good resale values and cars that have been driven for a short period of time may help your EMI go down.
Frequently Asked Questions
1. Are the calculators for home, car, and personal loans the same?
At the primary level, the EMI calculators available are the same. However, if you need separate information about different types of loans, you can opt for a home loan, car loan or personal loan EMI calculators.
2. How to calculate loan EMIs?
Calculating EMI is as follows: EMI = P * r * (1 + r)n/((1 + r)n - 1), where P equals the loan amount, r equals the interest rate, and n equals the duration of the loan.
3. What If I fail to pay my EMIs?
Defaults are considered as serious by lenders if you fail to pay your EMIs for more than three consecutive months.
If you do not repay the outstanding amount within the agreed-upon period, you will lose possession of the asset (house/car) that you have provided as collateral to the lender.
You will then receive a notice of default from the lender, which will provide you with a deadline within which to repay the outstanding amount.
4. What does an EMI consist of?
There are two components to each EMI: the interest component and the principal component. Both amounts are determined by the outstanding loan principal, term, and interest rate of the loan.
In terms of reducing-balance EMIs, interest is calculated according to how much loan is still outstanding, which eventually results in a decrease in interest payments.
5. Is the Equated Monthly Instalment amount shown by the calculator the same as that which the bank will ask me to pay?
It is a fixed amount of money that is paid by a borrower to a lender at a specified time each calendar month as a fixed monthly instalment.
As a result of equated monthly instalments, the loan is paid off over a specified number of years by applying both interest and principal to each month.
There are many types of loans, including real estate mortgages, auto loans, and student loans, in which the borrower makes periodic payments to the lender over a period of several years in order to repay the loan.