Car Loan Repayment Calculator

Do you Know that in Car Loan, Interest is Calculated on Reducing Balance. Means your Loan Interest for later months will be calculated on Balance Principal Outstanding and not the Initial Principal

This makes Car Loan an Imperative Choice even if you having your Own Funds. Reason in Fixed Deposit Interest calculated on Cumulative Basis - means Interest on Interest

See the Scenario where

» An amount of Rs 5 Lakh put in Fixed Deposit @ 8.5% will become Rs 7.51 Lakh after 5 years

» While an amount of Rs 5 Lakh taken as Car Loan @ 11% with Interest will be paid in as Rs 6.52 Lakh after 5 years

Yes - the Interest Paid on Car Loan is Rs 1.52 Lakh is lesser as against same amount deposited in FD where interest earned is Rs 2.51 Lakh even after TDS. This is due to nature of Cumulative Interest in FD as against Interest Paid on Reducing Balance in Car Loab

Thus, even if you have your Own Funds, recommended to buy Car on Finance and let your money be parked in Fixed Deposit or better investment schemes to realize better interest than low interest paid on Car Loan

Loan Repayment Calculator

You can easily compute in Loan Repayment in Seconds. However some noteworthy Facts

» Interest Paid is higher in Initial Years. If you intending to take loan and foreclose it will be a loss making scenario as Interest Paid in Initial 1/3rd of Loan Tenure accounts for over 50% of Total Interest due to the Bank

» Its important to ascertain in requirement of Loan Tenure, if you feel to Prepay Loan later then is advisable to take short Tenure Car Loan instead of Longer one

Important to note that some Banks do even charge Foreclosure charges making a double whammy of higher interest outflow in Initial years along with Prepayment Charges. So is important to assess in your need accordingly

Calculate Loan Amortization Schedule