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Owning a car was once considered a sign of prosperity. In the present day, this no longer holds true. As public transport overflows, people are now opting to take their own car to work and this makes owning a car a necessity rather than the luxury it once was. Not everyone can afford a car though, and this is where Indian Overseas Bank car loan steps in. If you have been through the process, you will know that it is important to check your EMI before you approach a lender – both bank and non-bank – for a loan. Here are some facts and figures about how the Indian Overseas Bank car loan EMI calculator works.
An EMI or Equated Monthly Instalment calculator is simple online software that asks you to enter the amount of loan you wish to take and the period for which you need the loan. The software will then calculate the total amount pay each month to repay your loan within the specified period. This amount is your EMI. Three major factors impact any EMI-
A car loan – as the name implies – is a loan taken for the purpose of purchasing a car. With cars becoming more and more important for daily commute, you may need to purchase one even if you do not have the funds to pay for it upfront. In this scenario, you have the option of taking a car loan and paying for your car bit by bit every month. The amount that you pay each month is called the EMI.
The EMI is calculated based on the amount of loan you need, the period for which you need it, and the interest you pay for that loan. While the actual computations are complex suffice it to say that in the initial months, the bulk of the EMI goes towards payment of interest while during the trailing months the bulk goes towards paying the actual loan.
Most lenders also charge a separate processing fee which goes towards paying for the administration and processing of the loan. This amount is also incorporated into the EMI.
It is important to check the rate of interest, the maximum amount of loan available, and the processing fee charged by various lenders before applying for a loan. You can also compare the EMI you will pay when taking loan from various lenders by using a car loan EMI calculator.
In order to compute your EMI the Indian Overseas Bank Car Loan EMI calculator will ask for certain basic information such as:
Having provided this information, the Indian Overseas Bank car loan EMI calculator will give you the EMI (Equated Monthly Instalment) you will be required to pay. The calculator will also show you the breakdown of the EMI in terms of principal, interest, and processing fee for each day of your tenure.
The car loan EMI calculator gives you some very specific advantages.
The main factors that typically impact EMI are –
The amount of loan
This is more or less equivalent to the price of your car. Indian Overseas Bank offers loans for up to 90% of the ex-showroom price of your car – that is the price that you agree to pay the dealer for the car. While there is no restriction on the type of car – sedan, Audi, Land Rover or Nano – there are other factors that impact the EMI calculation and consequently your loan amount.
The tenure of the loan
The tenure, term, or period of the loan is the time gap between taking out the loan and repaying it fully. You enter this amount as the Loan Term in the Indian Overseas Bank car loan EMI calculator to help compute your EMI. Indian Overseas Bank limits the tenure to 84 months for new cars and 84 months minus the life of the car for used cars. You can choose a shorter term if you prefer however it will raise the amount of EMI you will be required to pay per month.
Indian Overseas Bank currently charges an interest of 9.15% pa on the loan amount. This rate is subject to change depending on economic conditions, regulatory changes and other factors. Such a method of charging interest is called floating interest. Interest comprises a major part of your EMI. The larger the loan the larger the interest you pay. Interest is also impacted to some extent by the tenure in that initial instalments of EMI are interest heavy – which means that if you have a longer tenure you may have to pay interest heavy EMI for a longer time – albeit perhaps a smaller amount.
This is a fee charged by all lenders including Indian Overseas Bank towards the administrative cost of the car loan EMI. The fee varies from lender to lender. Indian Overseas Bank charges a processing fee of 134 in rural areas and 168 in urban areas for a loan of up to 2 lakhs. For a loan of more than 2 lakhs, the fees are the same but are charged per 1 lakh of loan amount – so if for example you opt for a loan of 3 lakh you would have to pay 134x3 in rural areas and 168x3 in urban areas.
Capacity to Pay
Indian Overseas Bank requires that your take home pay after all deductions including insurance and provident fund should be more than 50% of your gross. Other factors impacting capacity to pay are your debt to income ratio and your credit score. These two factors together make up your credit rating. If your credit rating is high, you stand a better chance to get a loan for the amount you desire.
Credit score is a numeric valuation of your credibility for repayment of debt. The figure is assigned by the credit bureau based on three factors –
A high credit score gives you a better chance to be eligible for a loan. Having a good debt to income ration – typically 50% or above – and a good credit score – ideally 700 or more – gives you the power to negotiate for a better deal with the lender.
As joint families dissolve and more and more couples step out to work, commuting to and from work assumes greater importance in terms of speed and comfort. Rather than spending time waiting for public transport, couples prefer to own two cars – one for each spouse – and keep control in their own hands. Given this scenario, every time a marriage takes place, a demand arises for a new car.
Not everyone can fit a car into their budget though – especially the higher end cars for family use – ergo the demand for car loans grows. Indian Overseas Bank makes it its business to provide the best loan deals to its customers based on their financial status and requirement for a car. Once you have assessed the amount of loan you need, use the Indian Overseas Bank car loan EMI calculator to check the EMI you will have to pay for this loan for various tenures. Click here to check your EMI now.
CreditMantri offers you the option to check for EMI for a single loan amount and tenure from multiple lenders. The only variable factors are the interest and processing fee charged by these lenders. You can enter these amounts yourself to assess the amount of EMI from various lenders. The resulting output will show you the amortization schedule which comprises of the total amount of EMI, the interest component, the principal (loan amount) component, and the balance loan due for the rest of the term.
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