EMI Calculator Tips: Save interest up to ₹ 1.5 lakh while buying a new car

EMI Calculator Tips: Save interest up to ₹ 1.5 lakh while buying a new car

by with No Comment Car Review

Everyone dreams of buying a new car or bike, but often people get trapped in the attractive finance offers available at showrooms. Instead of relying on the math told by the dealer, if you just spend 5 minutes using the EMI calculator on your mobile before going to the showroom, you can save thousands of rupees.

This small online tool helps you strike a perfect balance between loan tenure, interest rate and downpayment, thereby reducing the extra interest to the bank to less than half. Avoid being out of pocket by being a smart buyer and decide your monthly installment as per your budget. Come, let us know how this can happen?

Loan Mathematics: How to avoid dealer's trap

When you go to a car showroom, the sales executive there offers you the lowest down payment and long term loan (like 7 or 8 years). This deal looks very attractive because it reduces your monthly installment (EMI) a lot. But this is where common people make mistakes. The longer the loan tenure, the more interest you will pay to the bank.

Online EMI calculator takes you out of this trap. Before going to the showroom, compare the interest rates of different banks and enter the loan amount in the calculator to see how much money is actually going to go out of your pocket in the form of interest.

'Perfect balance' of down payment and interest rate

The most basic mantra to save your hard-earned money is – higher down payment and shorter loan tenure. While using the EMI calculator, follow the three steps given below-

Increase down payment: If you pay 30% to 40% of the total price of the vehicle as downpayment in advance, the loan amount (principal amount) gets reduced. Less loan amount directly means less interest.

Keep the duration short: Always try to ensure that the car loan is not for more than 3 to 5 years and the bike loan is not for more than 2 to 3 years. Adjust the tenure in the calculator to see which EMI suits your monthly income.

Comparison of interest rates: Put the interest rates (ROI) of different banks into the calculator and check how much a difference of 0.5% or 1% affects your total payment.

Understand with a small example

Suppose you are buying a car worth Rs 10 lakh and the bank is offering an interest rate of 9%. Let's see how much difference two different decisions make using an EMI calculator:

parameters without planning smart planning
down payment ₹1 lakh (10%) ₹3 lakh (30%)
loan amount ₹9 lakh ₹7 lakh
loan tenure 7 years (84 months) 5 years (60 months)
Monthly EMI ₹14,510 ₹14,530
total interest ₹3,18,837 ₹1,71,777

The truth about big savings: Look at the table given above carefully. In both the options, your monthly out-of-pocket installment (EMI) is almost equal (around ₹ 14,500). But by increasing the downpayment by just ₹2 lakh and reducing the loan tenure by 2 years, you directly save interest of ₹1,47,060! This is smart planning done through online EMI calculator.

Also keep an eye on processing fees and hidden charges

After getting an accurate estimate from the EMI calculator, when you talk to the bank or dealer, ask them about foreclosure charges (fees for premature closure of the loan) and processing fees. Many times banks show low interest rates and charge huge amounts in the name of file charges or processing fees. When you know the base figure through a calculator, no one will be able to mislead you financially.

Our advice: In the digital era, it is wise not to take financial decisions hastily while sitting in a showroom cabin. Next time whenever you decide to buy a new bike or car, first of all open the 'EMI Calculator' of any trusted website or bank on your mobile, try different combinations and deal with the dealer with full confidence.

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Save ₹40-50 thousand by checking EMI like this in 2 minutes

Save ₹40-50 thousand by checking EMI like this in 2 minutes

by with No Comment Car Review

Nowadays, most of the people dreaming of buying a new car get trapped in the sweet talks of the dealer as soon as they reach the showroom. The dealer says, 'Sir, don't worry, we will arrange the loan immediately. Interest rate is also low, EMI is easy!” But the reality is different. Most dealers have tie-ups with specific banks and in exchange for commission, they charge you higher interest rates, hidden processing fees or unnecessary insurance.

outcome? Your monthly installment (EMI) increases and you have to pay thousands of extra rupees in 5 years. But now there is no need to trust the dealer. By calculating EMI yourself on your smartphone in 2 minutes, you can choose the right bank and save up to Rs 40-50 thousand. Let us know how this process can be done?

Don't fall for the dealer's words.

Car dealers often force you to take a hasty decision. They say that 'this offer will end today itself' or 'there will be a delay in taking the loan directly from the bank'. Actually they have limited bank options and they push loans from only those banks where they get good commission.

Many times they quote low interest rates but add processing fees, insurance premium or extended warranty to the EMI. For example, if you are buying a car worth Rs 10 lakh and give 20% down payment, then a loan of Rs 8 lakh is required. If the dealer finalizes the loan at 10.5% interest, your EMI becomes higher.

The biggest weapon is to calculate EMI yourself. The formula is very simple-

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

Here P means loan amount, R means monthly interest rate (annual rate ÷ 12 ÷ 100) and N means total months.

Visit Free Apps and Websites

Now there is no need to do this math. Free apps and websites are available on mobile. Download 'EMI Calculator' app from Google Play Store or visit platforms like Groww, BankBazaar, Paisabazaar. Banks like Axis Bank, SBI or HDFC Bank also have their own EMI calculators. Just enter the loan amount, interest rate and tenure. EMI, total interest and payment schedule will be visible immediately.

Where and what interest rate?

At present, car loan interest rates in India start from 7.45%. Banks like Bank of Baroda, PNB and Canara Bank are offering 7.60% to 8.70%. SBI's rate is around 8.80%, while HDFC and ICICI start from 8.50%. If your CIBIL score is 750+, you can get a better rate. Instead of taking a loan through a dealer at 10-11%, if you take a loan yourself at 8.5%, the difference will be clearly visible. Suppose you take a loan of Rs 8 lakh for 5 years (60 months), then you will get this much benefit-

  • EMI at 8.5% interest will be ₹ 16,413
  • EMI at 10.5% interest will be ₹ 17,195

How to do smart calculations?

  1. Compare EMIs simultaneously on websites of multiple banks.
  2. Check processing fees (0.5-1%), stamp duty and insurance separately.
  3. Keep the loan tenure for 5-7 years. The total interest increases with longer tenure.
  4. Improve CIBIL score, close old loans.
  5. Negotiate with the dealer to get the loan paperwork done from the bank of your choice.

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Car Loan Calculator: How much EMI will have to be paid if you take a car loan of ₹ 10 lakh for 5 years? see the complete math

Car Loan Calculator: How much EMI will have to be paid if you take a car loan of ₹ 10 lakh for 5 years? see the complete math

by with No Comment Car Review

Car Loan Calculator: If you are thinking of buying a new car and want to take a loan, do not depend only on the dealership's offer. You can get a better deal by comparing rates across banks, loan aggregator websites and online portals. Let us know which bank is offering the cheapest loan of Rs 10 lakh for 5 years and how much will be the EMI.

According to the latest data from BankBazaar, the interest rates on new car loan of Rs 10 lakh (tenure of 5 years) in public and private banks range from 7.85% to 9.99%. However, the actual interest rate depends on the customer's credit profile, income and repayment history.

Interest rates and EMI of government banks
Punjab National Bank (PNB) – 7.85 percent interest, EMI Rs 20,205
Union Bank of India – 7.90 percent interest, EMI Rs 20,229
Bank of Baroda – 8.15 percent interest, EMI Rs 20,348
Canara Bank – 8.20 percent interest, EMI Rs 20,372

Interest rates and EMI of private banks
IDBI Bank – 7.95 percent interest, EMI Rs 20,252
ICICI Bank – 8.5 percent interest, EMI Rs 20,517
Axis Bank – 8.8 percent interest, EMI Rs 20,661
HDFC Bank – 9.40 percent interest, EMI Rs 20,953
IDFC First Bank – 9.99 percent interest, EMI Rs 21,242

Punjab National Bank is the cheapest option
If you want to take a car loan at low EMI, then government banks like Punjab National Bank (PNB) can prove to be a better option for you. In comparison to these, the interest rates in private banks are slightly higher. Punjab National Bank is the cheapest option, where new car loan interest rates start from 7.85%. The EMI for a car loan of Rs 10 lakh for 5 years is Rs 20,205.

Keep these things in mind

  • If you have a good credit score, you can get a lower interest rate.
  • It would be better to compare different banks instead of the car dealer's finance scheme.
  • Before deciding EMI, keep your monthly budget and fixed expenses in mind.
  • Don't depend on just one bank before taking a loan for a new car. There is a difference of up to 2 percent in interest rates, which can make a difference in your EMI for years.

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Car Loan: From PNB to HDFC Bank, where is the cheapest car loan? See the full list of banks

Car Loan: From PNB to HDFC Bank, where is the cheapest car loan? See the full list of banks

by with No Comment Car Review

Car Loan Interest Rates: It is always considered better to buy a car in the festive season. On this occasion, public sector and private banks are offering special offers on car loans to woo customers. These offers include zero processing fees, easy repayment options and discounted interest rates to those with better credit scores. If you are also thinking of buying a new car, then let us know which bank is getting the cheapest car loan?

According to data from Bankbazar.com, interest rates on a car loan of Rs 10 lakh (duration of 5 years) are going from 7.80 percent to 9.99 percent. However, these rates depend on the customer's income and credit score.

Public sector bank's interest rates and EMI

Punjab National Bank (PNB) – 7.80 percent interest, EMI Rs 20,181
Union Bank of India – 7.90 percent interest, EMI Rs 20,229
Canara Bank – 8.25 % interest, EMI Rs 20,396
Bank of Baroda – 8.40 percent interest, EMI Rs 20,468
State Bank of India (SBI) – 9.00 percent interest, EMI Rs 20,758

Private bank interest rates and EMI
IDBI Bank – 8.30 percent interest, EMI Rs 20,420
Axis Bank – 8.90 percent interest, EMI Rs 20,710
ICICI Bank – 9.15 % interest, EMI Rs 20,831
HDFC Bank – 9.40 % interest, EMI Rs 20,953
IDFC First Bank – 9.99 percent interest, EMI Rs 21,242

Where will you get benefit?
Public sector banks like Punjab National Bank and Union Bank can prove to be more economical for customers who want a loan on low EMI. At the same time, the interest rate in private banks is slightly higher. Therefore, it will be beneficial to compare on bank websites and loan aggregator platforms before taking a loan.

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