How Does A Car Loan EMI Calculator Function?

One of the most important considerations when opting for a loan is the actual instalment amount that one needs to pay. In earlier times, the actual instalment amount would become clear after applying for a loan. However, with the digital revolution, lenders display a lot of loan information online on their websites. Among this information is a tool that can help you figure out the loan instalment amount. That tool is called a car loan EMI calculator.


When it comes to a car loan, there is a special type of calculator on many lender websites. A car loan is a secured loan. This means the value of the car loan or the principal amount depends on the on-road price of the car. A car loan EMI calculator in some cases factors in the cost of the car based on the make and model and then calculates the instalment amount.

How does a car loan EMI calculator work?

A car loan calculator is extremely simple to use. It requires three inputs:

  • Principal amount
  • Rate of interest
  • Loan tenure

Once these three inputs have been entered, the calculator automatically displays the instalment amount. Some calculators also show an amortization schedule which shows the breakup between principal repayment and interest payment. This amortization schedule shows the amount of interest paid every year of the loan tenure. The formula for the calculation is not displayed to the user. It automatically gets calculated once the inputs have been entered.


The car loan calculator uses a formula:

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