The EMI for a car loan broadly depends on the period of the loan, interest rate, and the principal amount. So, the EMI will vary with the rate of interest and the loan tenure. For example: The EMI for a 7 lakh car loan at 7% interest and a loan duration of 5 years is Rs. 13,861.
How is the EMI determined?
The EMI is usually computed using the formula: E = P x R x (1+R)^n / {(1+R)^n – 1}
Here E stands for the EMI, P for the principal amount, R for the rate of interest, and n for the number of years, which is expressed in months. You can also use the EMI calculator to determine the EMI. This way, you do not have to use any complex formula.
Check : Car loan Eligibility
What are the factors impacting car loan EMI?
Some of the factors influencing car loan EMIs are:
- Income
- Category (either salaried or self- employed professional or a businessman)
- Age group
- Car loan scheme
- Car loan applicant
- New or used cars
- An account with the bank