Planning to buy a new Electric Vehicle (EV) car on car loan? How much EMI you have to pay for Electric Vehicle Car Loan, we will check in this article with video.
Electric Vehicle Car Loan helps you to buy EV car on loan at affordable EMIs. Your EMI will be calculated based on loan amount, interest rate and tenure. Lower the tenure, less interest amount you need to pay throughout your car loan tenure. Electric Vehicle Car Loan also helps you to save income tax under Section 80EEB with maximum deduction of Rs. 1.5 Lakh in Financial Year against interest amount of your EMI.
- Electric Vehicle Car Loan Video
- Car Loan EMI Features
- How Interest is Calculated in Car Loan
- Electric Vehicle Car Loan EMI Calculator
- Frequently Asked Questions
Electric Vehicle Car Loan Video
As seen above, you can easily use the Car Loan EMI calculator to know your EMI and total interest you’ll be paying on your car loan throughout the tenure.
Let us now see some interesting features of Car Loan EMI.
Car Loan EMI Features
- Car Loan EMI (Equated Monthly Installment) consists of 2 components – Principal Amount and Interest Amount
- The Principal amount in your EMI and low initially and increases with tenure.
- The interest amount is high initially and decreases with loan tenure
- This, maximum of the interest portion is taken from your car loan during the initial phases of the loan
- For electric vehicles, you can get income tax benefit under Section 80EEB
- You can claim up to Rs. 1.5 Lakh in a financial year as deduction, against the interest portion you pay in your EMI.
- Example of Car Loan EMI Calculation – For Rs. 5 Lakh Loan and tenure of 5 years and 10% interest rate, your EMI can be Rs. 10,624
- While you are paying the EMI every month, you also have the option to make Car Loan Prepayments to save some interest amounts throughout the tenure
- Few ways to reduce the interest amount on car loan is to take loan with less loan amount as possible, go for low interest rate car loan or reduce the tenure as much as possible
- While taking above steps your EMI will increase to save maximum interest amounts
ALSO WATCH: Car Loan Prepayment Calculation Video
How Interest is Calculated in Car Loan
Every month EMI consists of principal amount and interest amount. Hence, the interest is charged on your remaining outstanding balance of your car Loan.
Let’s take the above example where:
Loan Amount = Rs. 5 Lakh
Tenure = 5 Years
Interest Rate = 10%
EMI Calculated = Rs. 10,624
So for first month interest portion calculation, the entire balance of Rs. 5 Lakh (loan amount) will be considered:
First month Interest = monthly interest rate * Balance / 100
First month Interest = 10% / 12 * Rs. 5 Lakh / 100
First month Interest = Rs. 4,167
Now principal portion will be calculated as = EMI – interest amount = Rs. 10,624 – Rs. 4,167 = Rs. 6,457
Similarly, for second month your outstanding balance will be reduced by the principal amount paid in first month:
Updated Balance remaining = Rs. 5,00,000 – Rs. 6,457 = Rs. 4,93,543. Now second month interest will be calculated on this updated balance:
Second month Interest = monthly interest rate * Balance / 100
Second month Interest = 10% / 12 * Rs. 4,93,543 / 100
Second month Interest = Rs. 4,113
In second month, the interest amount is slightly decreased, and hence the principal amount will slightly increase:
Principal portion will be = EMI – interest amount = Rs. 10,624 – Rs. 4,113 = Rs. 6,511
In this way interest and principal amounts will be calculated for remaining months as well.
Below are the principal and interest amounts for 1st year considering above example:
Fill below form to Download Car Loan EMI calculator in Excel with Prepayment option:
Electric Vehicle Car Loan EMI Calculator
Also you can quickly find the EMI of your Electric Vehicle Car Loan using below calculator by providing Loan Amount, interest rate and tenure in months:
Electric Vehicle Car Loan EMI can be easily calculated using above calculator or the excel calculator provided. The interest amount in your EMI is high initially and decreases with tenure of loan, where as principal amount is low initially and increases with tenure.
It is important to note that longer the loan tenure, more interest amount you will be paying in your car loan, so try to keep the loan tenure as less as possible. While doing so, you might have to pay more EMI amounts every month, but it is one of the ways to close your car loan as soon as possible.
Some more Reading:
- Home Loan Calculation Method Explained
- Rs. 1000 Mutual Fund Returns Calculation for 15 Years
- Car Loan Floating Interest Rate Calculation
- Why Home Loan Tenure Increases?
Frequently Asked Questions
Is loan available for electric vehicles?
Yes, Electric Vehicle Car Loan is available for EV Cars. You get income tax benefits on the interest portion under Section 80EEB.
What is interest rate on EV car loan?
EV car loan interest rate can be between 8.5% to 9.5% per annum. Check latest EV car loan interest rates here provided by SBI
Are electric car loans cheaper?
Yes EV car loans are cheaper than the normal car loans.
Is electric vehicle loan tax exemption?
Yes you can claim deduction under Section 80EEB against the interest amount you pay with your EMI every month throughout your loan tenure. Maximum limit to claim under this section is Rs. 1.5 Lakh
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Income Tax Calculator App – FinCalC
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