Car Loan Calculator

What is a Car Loan?

A car loan is a type of loan that helps you finance the purchase of a new or used car. The loan amount is repaid over time with interest, typically through monthly installments.

How is EMI for Car Loan Calculated?

The EMI (Equated Monthly Installment) for a car loan is calculated based on the loan amount, interest rate, and loan term. The formula used to calculate EMI is:

EMI = P × r × (1 + r)^n / ((1 + r)^n - 1)

Where:

• EMI: Monthly installment
• P: Loan principal (loan amount)
• r: Monthly interest rate (annual interest rate divided by 12)
• n: Loan term (in months)

Why a Car Loan is Important?

• Easy Access to Finance: Car loans make it easy to purchase a car without upfront full payment.
• Flexible Repayment Options: With affordable EMI options, you can repay the loan over time.
• Builds Credit Score: Successfully repaying your car loan can improve your credit score.

Example Calculation

If you borrow ₹6,00,000 at an annual interest rate of 9% for 5 years, your monthly EMI is calculated as:

Loan Amount = ₹6,00,000

Interest Rate = 9% annually (or 0.75% monthly)

Loan Term = 5 years (60 months)

Using the formula, the EMI is approximately: ₹12,438.24