What is an EMI?
The Equated Monthly Instalment (or EMI) consists of the principal portion of the loan amount and the interest. Therefore, EMI = principal amount + interest paid on the Car Loan. The EMI, usually, remains fixed for the entire tenure
of your loan, and it is to be repaid over the tenure of the loan on a monthly basis.
Mathematically, EMI is calculated as under:
P x R x (1+R)^N / [(1+R)^N-1]
P = Principal amount of the loan
R = Rate of interest
N = Number of monthly instalments.
So, say you are applying for a Car Loan of Rs 6.50 lakh from Axis Bank at a rate of interest of 9.5% p.a. and your loan tenure is 8 year (or 96 months), your EMI will be calculated as under:
EMI = 650000* 0.007917 * (1+ 0.007917)^96 / ((1+ 0.007917)^96)-1 = Rs 9,692
The rate of interest (R) on your loan is calculated monthly i.e. (R= Annual rate of interest/12/100). For instance, if R = 9.5% per annum, then R= 9.5%/12/100 = 0.007917.
Does it look complicated? Don’t worry! Use Axis Bank’s Car Loan EMI calculator.
Axis Bank’s Car Loan EMI calculator is a great online tool that provides you with the answer in a split second and enables you to understand how much will be your EMI outgo. All you got to do is use the slider to enter the
loan amount, interest rate, and the tenure of your loan (in months).
Here are the five benefits of using the EMI calculator:
- Easy to access
- Provides quick results
- Saves time and energy spent on doing manual calculations
- Helps you ascertain how much will be your Car Loan EMI outgo
- Make loan planning easier for you
Remember, the interest rate and your loan tenure are the vital deciding factors for your loan EMI. Higher the interest rate on the loan, higher will be your EMI and vice-versa. Similarly, opting for a longer tenure reduces your
EMI and vice versa. So, consider opting for longer loan tenure when you avail a Car Loan so that repayments can become comfortable.
Do note that during the initial months of the Car Loan tenure, you pay more towards interest, and gradually, as you repay the loan, a higher portion is adjusted towards the principal component. This is because; EMIs are computed
on a reducing balance method, which works in your favour as a borrower.
How is the Car Loan EMI to be paid?
You can opt for either of these:
- Standing Instructions (SI) can be used if you have a savings account, salary account, or current account with Axis Bank. Your EMI will be automatically debited from the account you specify.
- National Automated Clearing House (NACH)/ECS mandate can be used if you do not have an account with Axis Bank and would like your EMIs to be debited automatically at the end of the monthly cycle.
- Post-Dated Cheques for your Car Loan EMI is also an option if you do not hold an account with Axis Bank and for non-ECS locations.
Opting for SI or NACH/ECS mode is preferable as it is faster and less prone to errors than PDCs.
In case if you skip your EMI…
Remember, skipping EMIs does not reflect well on your creditworthiness and could impact your credit score. Hence, in the interest of your financial wellbeing, borrow wisely and as far as possible do not skip your repayment.
Yet, in case of insufficient balance or any other reason you skip your EMI, the bank will caution you and may charge a late payment penalty. As a result of skipping the EMI, the tenure of the loan would increase (assuming EMIs
remaining the same).
Note that persistent skipping inflicts the risk of default, and in such a case, your car hypothecated to the bank as collateral for the Car Loan, may get seized. Hence, always make it a point to repay the Car Loan EMI on time.
And in case if you partially prepay the Car Loan…
Part-prepayments of Car Loan is possible but subject to part payment charges.
Likewise, foreclosure of the loan, i.e. paying all the outstanding dues of your Car Loan, is also possible by submitting a foreclosure request to the bank. Foreclosure again is subject to charges.
Apply for an Axis Bank New Car Loan and make your dream of owning a car come true.
Broadly there are three ways you can apply:
- Visiting any Axis Bank Loan centre in person;
- By calling Axis Bank call centre numbers; or
- Applying online
Applying for a Car Loan online is by far the best and comfortable it can be done from anywhere- home, office, café, on-the-go…and can be done any time.
All you got to do is enter your name, e-mail id, mobile number, state, city, captcha code, and accept the disclaimer policy before you click on the ‘Submit’ button. Soon you will receive a call from one of the Axis
Bank representatives, who will explain the details about your car loan.
Live your dream drive in your dream car today!
