How does Car Loan EMI Calculators work?

You can calculate the Car Loan EMI Amount with the help of the mathematical formula: 

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

where P, R, and N are the variables. This also means that the EMI value will change, each time you change any of the three variables. Let’s discuss these three variables in detail.

• ‘P’ stands for the Principal Amount. It is the original loan amount given to you by the bank on which the interest will be calculated.
• ‘R’ stands for the Rate of Interest set by the bank.
• N is the number of years given for the repayment of the loan. As you must pay the EMIs each month, the duration is calculated in the number of months.

So, if you take a car loan of Rs 10 lakh at an interest rate of 12%, 

the approximate EMI will be: P = Rs 10,00,000, 

• R = 12/100/12 (You must convert into months), 
• N = 2 years or 24 months. 
• EMI = [10,00,000 x 12/100/12 x (1+12/100/12)^24] / [(1+12/100/12)^24-1] 
• EMI = Rs 47,073.

How to use the ClearTax Car Loan Calculator?

Advantages of using ClearTax Car Loan EMI Calculator

• Time-saving: Quickly calculates EMIs without the need for complex manual calculations.
• Financial Planning: Helps in organizing your finances before applying for a car loan.
• Clarity: Provides a clear understanding of the monthly EMI amounts.
• Comparison: Allows comparison of different loan amounts, tenures, and interest rates to find the best option.
• Informed Decisions: Assists in selecting the appropriate loan tenure based on your financial situation: Shorter tenure results in higher EMIs but lower overall interest. Longer tenure results in lower EMIs but higher overall interest.
• Convenience: Easy to use with just basic loan details needed (amount, tenure, interest rate).
• Cost Savings: Helps identify the most cost-effective repayment plan.
• Stress Reduction: Eliminates uncertainty and stress associated with calculating EMIs manually.

Factors Affecting Car Loan EMI

Several factors affect the car loan EMI calculation. As the EMI depends broadly on the principal amount, tenure, and rate of interest, any change in these variables can result in a change in the EMI amount. The other factors are:

• Category (Salaried, Self- Employed Professional or a Businessman)
• Income slabs
• Age group
• Tenure of loan
• New or used cars
• Car loan scheme
• Car loan applicant
• An account with the bank

The loan eligibility will also depend on the value of the car selected by you.