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Why is it Important to Calculate your Car Loan EMI Beforehand?

IndianMoney.com Research Team | Posted On Thursday, May 02,2019, 06:33 PM

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Why is it Important to Calculate your Car Loan EMI Beforehand?

 

 

A car loan is an amount borrowed from any bank or financial institute for the purchase of a new car or a used car. While availing a loan, the most important part is the loan repayment process. The funds that are sanctioned by the banks or financial institutes depend on the repayment capacity of the individual. Therefore before applying for the loan, you must check the amount you need to pay as monthly instalments. This will help you to purchase your dream car without the chances of your loan application getting rejected. Also, it will help you make an informed decision and will reduce of chances of defaulting due to monetary constraints. So, it is important that you check your EMI beforehand and choose a plan that suits your financial requirement and repayment capacity.

Car Loan Interest Rate:

The rate of interest charged and the amount borrowed depends upon the income and the credit history of the customer. Procuring a car loan is usually simple when compared to other loan products. These are secured advances where the car purchased acts as the collateral.  Currently, the rate of interest offered by banks and other financial institutions is from 8.60% to 10.1% per annum on a car loan.

Car Loan EMI calculator:

Manually computing your car loan EMI is a time-consuming task. To ease the process and provide customers with an easy way to pre-calculate their car loan EMI, the online car loan EMI calculator is devised. This is an online tool that helps you to calculate your car loan EMI with minimum chances of errors. This way you can calculate the amount of monthly instalment you need to pay for the loan availed for purchasing a car of your choice. To check your monthly instalment amount you need to provide some necessary information like amount of loan, repayment tenure and rate of interest. As soon as you provide the input your monthly EMI is displayed. Pre-calculating your EMI helps you to choose a car loan scheme that is more suitable to you in terms of repayment. Consequently, this reduces the chances of loan default. Additionally, it helps you to maintain a good credit score as timely repayment reflects positively on your credit report.

SEE ALSO: How to choose Best Car Loan

Car Loan Eligibility:

Nowadays, it is easy to apply for a car loan from the comfort of your home or office. All you have to do is visit the bank website, download the application form, fill it up and submit it along with the necessary documents. You can also visit the nearest bank branch to submit the application form and get the guidance of a bank executive on the car loan application process. But before rushing to apply for a car loan, you must ensure that you meet the eligibility criteria.

  • The applicant must belong to the age bracket of 18 to 60 years
  • The monthly income of the applicant must be above Rs. 10000
  • The applicant must be a citizen of India
  • The applicant can be self-employed or salaried professional having a steady source of income
  • A Car loan can be availed for a new car and used car

Documents Required for a Car Loan:

  • Proof of age
  • Identification proof
  • Application form
  • Passport sized photograph
  • Proof of residence
  • Income proof
  • Bank statement
  • Signature verification proof

Some banks may require certain documents of you that other banks don’t require, so it’s advisable to cross-check with the lender bank prior to your appointment with the loan officer.

Calculating car loan EMI beforehand proves to be of great assistance as it can help you find out the monthly cost of your loan. Depending on your equated monthly instalments, you can create a budget to maintain a low debt-to-income ratio to avoid defaulting or missing on your car loan EMIs. Depending on the results, you can adjust the loan amount or loan tenure to ensure that your EMI payments do not exceed half of your monthly income. If you opt for a short tenure then you will end up paying higher EMIs whereas if you opt for a longer tenure then you will incur higher interest payments on your car loan. 

SEE ALSO: How to Apply for Car Loan?

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