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The Indian car loan market has seen a surge since the past few years. With the growing economy and attractive loans offers, there has been a rise in loan borrowers for cars. The marketing tools used by banks have had a growing impact on the sales of cars. For example, showing the common man a picture of a family going for an outing in the car stirs feelings for people and a car gets added to their wish list. Banks then offer attractive loan offers with low EMIs and long tenures and communicate how simple it is now to own a car.
First, let’s understand the term, Equated Monthly Instalments or EMI – when one takes a loan, the borrower needs to pay the bank the money on monthly instalments. These instalments depend on the loan amount taken, the loan tenure and the interest rate offered by the bank. Some banks even offer EMIs based on the changing market prices. The EMI can go higher or lower based on the market shares. There are also instances when the bank allows the loan borrower to pay a huge sum as down payment so that the monthly EMIs are reduced.
Indian Bank is one of the banks that offer car loans at a lower rate of interest, i.e. at 9.50% with the lowest EMI of Rs. 1,634 per lakh, which is lesser than many other banks. It offers the loan borrower 85% of on-road price of car as loan. If in case you are paying an EMI that is higher than this, you can opt to transfer the balance and relocate the car loan to Indian Bank. Additionally, there are no prepayment charges on an Indian Bank car loan.
Indian Bank Car Loan EMI consists of principal payment and interest payment. In the beginning years, the interest part on loan is more than the principal part. In the whole repayment period, EMI remains constant but the interest component on loan keeps decreasing while principal component keeps increasing apart from change in interest rate on Car Loan
In case of change in Indian Bank floating interest rates which is currently at 9.50%, you have two options:
In case you make pre payment of Indian Bank Car Loan, then also you get the same options either to keep the EMI same and reduce the loan tenure or to reduce the EMI and keeps the tenure same.
Indian Bank Car Loan EMI depends upon the loan amount, interest rate and loan tenure.
EMI Calculator Indian Bank calculates EMI using below formula:
The EMI calculator formula EMI (E) = [P x r x (1+r)^n]/[(1+r)^n-1] where,
For example, you apply for a Car Loan of Rs. 5,00,000 from the bank at 9.50% interest rate with tenure of 84 months.
In this case, R = 9.50/12*100 = 0.00792
Therefore, EMI = 5,00,000 *0.00792* (1+0.00792 )^84/([(1+0.00792)^]-1)
EMI = Rs. 8,172
This means you will have to pay Rs. 8,172 for 84 months to repay the entire loan. The total amount you will pay = Rs. 8,172 * 84 = Rs. 686,447 which includes Rs. 186,447 of interest on the loan amount of Rs. 5,00,000.
CreditMantri has a credible EMI calculator which can help you while availing all kinds of loans from leading lenders in India. When you apply for car loan in Indian Bank, there are some eligibility factors on which basis Indian Bank approves your car loan.
The income of the loan borrower helps in determining your capacity to repay the loan. Indian Bank gives car loan to only those whose minimum net annual salary is Rs. 2 lakh. This calculator is simple and can be used by just entering details like the loan amount, interest rate and tenure. In case, your individual car loan eligibility as calculated by the car loan eligibility calculator is less than the loan you need, you can add the income of earning family members.
Once you know the EMI amount, you have a clear idea of the EMI that you need to pay each month. Also, if you have a good credit score, you will be entitled to better loan terms and save a substantial amount every month. If this is your first car loan, then it is advisable that you create a profile on CreditMantri to check if the loan is suitable for your credit profile.
While the price of the car or the interest rate of the car loan are definitely the important factors that determine which loan you must opt for, there are other factors at play as well. You must have a look at your income levels and ensure that your debt-to-income ratio doesn’t exceed 30%-50%. This ratio will enable you to repay your loan with ease.
Another very important factor is your credit score. This is a score given by the credit bureau based on three main parameters:
A good credit score can help you to negotiate better car loan terms with a lender. If you have a credit score above 700, you can avail a loan with lower interest rate and save a lot of money every month.
1. Will I get charged for using the Car Loan EMI Calculator for Indian Bank on CreditMantri?
No, the car loan EMI Calculator available on CreditMantri is free of charge and you can use it any number of times until you find an affordable loan.
2. Is it easier to calculate the EMI using the formula or an excel sheet, in comparison to the EMI Calculator tool?
Calculating the EMI using the formula or an excel sheet would be error-prone and time-consuming. Moreover, it would be really complicated if we have to calculate the EMI when prepayments are made towards the debt. To avoid such problems, we recommend you to use the EMI Calculator on CreditMantri.
3. What is the maximum tenure of Indian Bank car loan?
You can repay your Indian Bank car loan in a flexible period of 7 years.
4. Can I add my spouse's income while applying for car loan from Indian Bank ?
You can combine your income with the income of your spouse to increase your loan eligibility and to get higher loan amount.
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