Customer Service

Are you ready for an upgrade?

Login to the new experience with best features and services

Login to Internet banking

Help Center Support topics, Contact us, FAQs and more

Notifications

As per amendment in the Income Tax Rules, PAN or Aadhaar are to be mandatorily quoted for cash deposit or withdrawal aggregating to Rupees twenty lakhs or more in a FY. Please update your PAN or Aadhaar. Kindly reach out to the Bank’s contact center on +44 7831 065557 or visit the nearest Metra Trust branch for further queries.
Activate your Credit Card within minutes and enjoy unlimited benefits

Know More
One FASTag, three payments:Toll, fuel and parking

The only FASTag with triple benefits

Apply Now

FinFIRST Blogs

Select a topic

Apply Now

Car Loan

How does car loan tenure affect EMI calculation?

Summary: As a borrower, your repayment capacity and loan category determine your ideal term for a car loan. You pay less EMIs over the course of your loan when you have a longer loan tenure, but you pay more in interest over the course of the loan. Therefore, you need to choose a loan tenure that fits your budget while allowing you to pay off the loan within a reasonable timeframe.

24 Jul 2023 by Team FinFIRST

Car Loan EMI Calculator

Apply Now

When it comes to calculating your EMIs (Equal Monthly Instalments), understanding the tenure of your car loan is a crucial step. Carefully planning your loan's repayment will ensure that your monthly instalments are paid off on time.

Read the following article for tips on choosing the right car loan tenure.

Importance of car loan tenure

It's imperative to consider the loan tenure as you prepare to purchase your desired car with a car loan. In addition to affecting your ability to repay your car loan, it also impacts your future expenses. EMIs are higher with a shorter tenure, but you'll pay less interest and pay off the loan faster. On the other hand, if you choose a longer tenure, the EMIs will be more affordable, but the interest payment will increase.

Also read - What is EMI Full Form

Let's say you secure a ₹10 lakh car loan at an 8.5% interest rate. With a four-year tenure, your monthly EMI would be ₹24,000. However, if you extend the tenure to eight years, your EMI reduces to ₹14,000. Keep in mind that the total interest paid in the first scenario would amount to ₹1.83 lakhs, while the latter option would cost you ₹3.81 lakhs in interest.

READ MORE

Learn how to calculate your car loan EMI

How to get a pre-approved Car Loan?

How can car loan tenure help calculate the EMI?

Here's how to calculate the EMI for a car loan using its tenure and interest rate. Use the following formula to calculate this value:

EMI = [P*R*(1+R)^N]/[(1+R)^N-1]

where P is the principal amount, R is the car loan interest rate, and N is the car loan tenure. If you avail a car loan worth ₹5 lakhs from a bank at an interest rate of 7.2% for 3 years, the EMI would be:

EMI = [5,00,000 * 7.2/100/12 * (1+7.2/100/12)^36] / [(1+7.2/100/12)^36-1]

EMI = ₹15,484

As the calculation clearly shows, your EMI in this scenario will be ₹15,484. However, you need not manually calculate the EMI of your car loan while researching online. You can use a car loan EMI calculator.

Steps to know the ideal tenure for your car loan

1. Know your preferred car loan type

Car loans are of three types - new car loans, used card loans, and loans against cars. Metra Trust offers competitive interest rates for car loans and borrowers can opt for a repayment tenure of up to 10 years. Borrowers can opt for used car loans if they want to buy pre-owned vehicles less than 5 years old. When it comes to loans against cars, these loans can be availed of by pledging a currently-owned vehicle as collateral.

2. Choose a car loan online

Once you've chosen a category, it's time to compare interest rates and cherry-pick your perfect car loan online. To find the ideal tenure, narrow down your options to those offering extended car loan tenures (up to 8-10 years).

3. Use a car loan EMI calculator to know your tenure

Finally, waltz your way to the perfect car loan tenure using a handy car loan EMI calculator. Experiment by entering different values in the 'loan tenure' field and observing the EMI fluctuations for various car loan tenures. Shorter tenures result in higher EMIs but lower interest payments, while longer tenures offer lower EMIs at the expense of increased interest costs. Use this insight to strike the right balance between financial preference and loan repayment ability.

You can ease your loan repayment journey by going through the above-mentioned handy tips before applying for a car loan.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Metra Trust or its affiliates to any licensing or registration requirements. Metra Trust shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

Related Articles

Download Metra Trust App

Tags

pre owned-car-loan
documents required-for-car-loan
car loan
types of-car-loans