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Owning a car is no longer the luxury it used to be – it is now a necessity for every household, and in many cases a necessity for every adult within the household. Too, there are more cars of different brands and models in the market for you to choose. The one thing that has presumably not changed is your budget. The State Bank of India car loan effectively bridges this gap. A car loan works like any other loan with options to pay in instalments and knowing your instalment in advance will help you decide on the loan amount. State Bank of India has an online EMI calculator that helps you understand your monthly outgo towards car loan. Read on to find out exactly how a car loan EMI calculator works.
A car loan EMI calculator is an automated online tool that can calculate the amount of equated monthly instalments you would be required to pay if you take a certain amount of loan for a certain term. You can experiment with various loan amounts and terms to arrive at a figure best suited to your budget and requirements.
A car may not fit into every budget and a car loan from State Bank of India comes in handy in such a situation. A car loan is simply a fund given by the lender towards payment for the car. You can then repay the lender at your convenience in easy instalments. There is of course a price tag attached – the interest you pay on the loan. The amount you pay the lender every month is called the EMI (Equated Monthly Instalment). It is a fixed amount which you are required to pay towards settlement of your loan.
While the EMI is computed as a fixed, the amount of loan would obviously reduce as you pay off small parts of the principal amount. Similarly the amount of interest due would vary depending on the balance loan amount and the remaining term. When computing EMI, the amount is interest heavy in the initial stages – that is to say the bigger portion of the amount you pay each month is adjusted towards interest and only a small portion goes towards payment of the principal.
As you pay off more and more of the interest, the EMI gradually becomes principal heavy with more and more portion being adjusted towards the actual loan. This continues until eventually you have paid off the entire amount of loan and interest thereon.
The EMI also comprises of other loads such as processing fees, documentation fees, charges for loan cancellation and rebooking, charges for pre-payment and so on. You must account for all these factors preferably before selecting the car you want to buy and allocating a budget for the purchase and definitely before you approach any lender.
The State Bank of India car loan EMI loan calculator is the simplest and fastest way to relate the amount of loan you need to the amount you will pay every month towards repayment.
State Bank of India Car Loan EMI calculator requires certain parameters to work with. These parameters include -
Loan Amount: The amount of loan you need from State Bank of India
Loan Term: The number of months / years over which you wish to repay the loan.
Interest rate: The rate at which State Bank of India charges interest on loan. This will typically range between 9 to 11%.
Processing fees: State Bank of India charges you a small fee to pay for the cost of paper, employees, taking photocopies and other administrative tasks that go towards loan disbursal.
Once you have entered these amounts, the State Bank of India car loan EMI calculator will display the amount of EMI you will need to pay. It will also show you the amount of interest involved and the processing fee in addition to the basic loan amount, processing fee, and any other charges that may be levied from time to time.
Loan amount: The amount of loan you take will generally be equivalent to the cost of the car you purchase. Sbi car loans begin from as low as INR 10,000 and though there is no upper limit the amount of loan you take must not exceed 85% of the price of the car you purchase. The choice of the car is entirely yours as long as you have the capacity to repay the loan. If your income supports it, you can take a loan to purchase high end cars such as BMW, Audi, and Volvo.
Loan Term: The number of months or years over which you repay the loan is called the term of the loan or loan term. You can opt for a short or long term loan as per your own paying capacity. Loan term is one of the important factors that directly impact your EMI. The longer the term the lower will be your EMI and conversely the shorter the term the larger the amount you need to pay each month towards repayment.
Interest rate: This is another factor directly impacting your EMI. Sbi charges a floating rate of interest which means that the rate of interest may vary depending on economic conditions, government rules, and RBI regulations and guidelines.
Processing Fee: This is an indirect cost for taking a car loan. Though it does not directly impact your EMI it is nevertheless an important component. There is a lot of process and documentation involved in taking a car loan. The processing fee is an umbrella cost that covers all these administrative expenses such as appraisal, credit rating and so forth.
Credit Score: Credit score is a numerical figure given by the credit bureau that reflects your capability to make payment against a new loan. The figure is based on your borrowing and repayment history and your current economic status as well as your current total income.
The car you decide to purchase, its price, and the rate of interest are the major components that determine your EMI. However there are a few other things that may impact your decision as well as the approval of your loan. The first is your current debt to income ration which should not exceed 40 to 50%. The other important factor that may impact your loan approval or EMI is your credit score.
Both these factors indicate your capacity to repay the loan. A low debt to income ratio or a high credit score – or both – means that you are capable of managing your debts efficiently. A good credit rating – indicated by your debt to income ration and credit score – gives you better bargaining power and you can negotiate for a lower interest rate which in turn will lower your EMI.
Cars have become an indispensible part of every Indian family. Many Indian families now own several cars – one for each working member and one for the household. As the economy grows and disposable individual income rises, the demand for cars is growing as is the desire to own luxury cars like sedans and SUVs. In particular SUVs are becoming popular as family vehicles while smaller cars are used by individuals.
As the Indian population converges at showrooms and expos, many prefer to sit back on the couch and surf online for their dream car – no easy task. There are hundreds of questions that plague every person who is looking to purchase a car – the mileage, the maintenance, and proximity to a service centre are just some of them. While most of these questions can be answered by reading detailed product descriptions and reviews, the question upper most in all minds – the cost – can be answered by a single click on the State Bank of India car loan EMI calculator.
CreditMantri offers its users a universal EMI calculator that can help you work out the EMI for various types of loan using several variables. The calculator is easy to use and you can easily compare costs for several lenders including banks from a single place. As the calculator spews out information, you can build your own comparison chart to compare your options based on the price of the car you wish to buy, its price, the rate of interest, and the tenure of the loan.
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