• Repayment Options for Car Loans

    Car Loan Repayment

    Car loans are becoming the usual way to purchase an automobile owing to the convenience and flexibility that comes with it. First of all, you don’t have to haggle with dealers for loans or empty your lifetime savings to buy a four wheeled dream. Instead, you can just apply from the comfort of your home and what's more, you can even repay in an instant through the click of a button.

    Repayment refers to the periodic payments that you make to satisfy the car loan. There are several ways by which one can repay a car loan – regular EMI, step-up EMI and step-down EMI to name a few. To avoid any hassles later, borrowers must be clear about the advantages and disadvantages of every repayment method before signing the car loan agreement.

    Car Loan Repayment Types

    Following are the six commonly offered repayment schemes.

    • Normal EMI

      The most common repayment method, a monthly instalment amount is decided based on the tenure and interest rate. EMIs are paid either at the beginning of each month or at the end of a month.

    • Step-Down EMI

      In this repayment method, the EMI amount gradually decreases from highest to lowest. The EMI reduces based on the number of payments done.

    • Step-Up EMI

      In step up EMI, the initial EMI is charged less and it increases based on the premise that the expected income of the borrower also increases. Generally, the EMI change would happen twice during the entire loan tenure.

    • Special tie-up Method

      Sometimes the dealer and the bank have a tie-up in a way that whenever there is excess funds, the same is used for prepayment of the car loan. This helps the borrower to reduce the principal as well as to reduce the total interest.

    • Balloon EMI

      In this method, borrowers are allowed to make lump sum payments towards the end of repayment tenure. The balloon method reduces the initial burden of a loan on the borrower.

    With banks offering you the flexibility to select a convenient repayment method, you should be able to zero-in the best scheme based on the interest amount offered, the loan quantum and your financial situation.

    Car Loan Repayment Schedule

    A car loan amortization calendar or schedule will show how your EMIs are used to pay off the principal and interest each month. A car loan repayment schedule calculator will give you information about the EMIs, interest on the outstanding principal and also how the principal decreases on a monthly basis because of the EMI payments.

    To arrive at a car loan repayment schedule, you can make use of an online amortization calculator. You will have to enter details like the loan amount, annual rate of interest and the total number of EMI payments. The calculator will project details about the EMI, interest on principal and also the reduced principal. These details will help you plan your prepayment and also to make future budgets.

    Car Loan Repayment Calculator

    A car loan EMI calculator when it comes to deciding the loan amount and tenure for the prescribed interest rate. Before applying for a car loan, you should calculate the affordability based on the interest rates and also decide on the tenure. This will not only ensure that you are not going overboard with the loan amount but also help you choose a vehicle that fits your budget.

    In an online car loan repayment calculator, you have to input the loan amount, tenure and interest rates. The calculator will instantly display the monthly EMI, total interest payable and other amortization details. This will help you plan better for the future since you will know the monthly EMI that will be debited for the car loan repayment. Also, you can keep changing the tenure and loan amount multiple times for the interest rates offered to arrive at a suitable EMI.

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