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Terms Used For Auto Loan EMI Calculation

Almost every credit consultant and loan pundits state that every auto loan applicant, whether first or fifth, should amortize their loan to ensure that it can be paid over time. For beginners amortizing means calculating the monthly installment that has to be paid back over time of the loan. However, most people don’t do this either because they are too confident regarding their income and the loan EMI while others don’t do because they don’t know how to do it. The following lines provide information regarding the four terms which are used in every monthly installment loan calculator.

The first field is usually the car price. Here, the applicant should put the total price of the car i.e. insurance cost, dealership fees, service charges, detailing if any etc. It is best to get a complete loan as most auto loan procedures require down payment and you wouldn’t want to pay the same money twice to the lender and dealership.

The second field is the down payment that is needed for the loan. Usually lenders set some specific percentage for the loan such as 10-15 percent whereas sometimes it is completely voluntary. It is better if it is provided as it brings down the monthly installment. The third field is the term. This signifies the amount of time that the loan is going to run. The total amount is divided by the term and the installments are divided evenly for the term usually monthly or quarterly.

The fourth field is rate of interest. As the applicant has to fill this up, it is best to calculate for a range of rates so as to ensure that the rate offered by the lender doesn’t come as a shock. This term makes the monthly installment calculation approximate but still this helps in getting a look of what the auto loan is going to be.

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