When it comes to car financing companies in India, the one name that stands out is SBI, isn’t it? With a massive brand visibility aided by branches across the landscape of the country, State Bank of India (SBI) is called upon often to fulfill one’s car need. The brand visibility is further complemented by the attractive car loan offers in terms of interest rates, processing fee and all.
One of the prime considerations could be the equated monthly installment (EMI) you are supposed to pay for SBI Car Loan, right? You can get to know the same using SBI Car Loan EMI Calculator. If you are not aware of it, you can take this article as a guide to know the same.
Pivots of SBI Car Loan EMI Calculator
Before glancing at the EMI calculator, which is available online for use, you should be aware of the intricacies pertaining to the following variables-
- Interest Rate
- Loan Amount
SBI Car Loan Interest Rate 2017
The interest rate is one of the key factors in deciding the shape of your car loan repayment. When the interest rate is on the higher side, it takes out a lot from your pocket and vice-versa. The interest rates are set by the lenders based on income, repayment capacity and the credit history of an individual.
So one needs to ensure a healthy credit record, in addition to earning substantially higher to inspire confidence among the lenders to reduce the interest rates. With the reduction in rates, the EMI will also come down. EMI, as you would know, combines a portion of both principal and interest payable from your end every month.
As a matter of fact, SBI car loan interest rates stand at 8.70%-9.20% per annum for new cars and 10.35%-12.60% p.a. for old models.
How Does Loan Amount Influence the EMI?
So when you apply for a greater amount of loan, the EMI becomes higher and vice-versa. This is where savings can play a critical role in decreasing the amount of installment and curtailing the overall outflow. The savings will reduce the amount of loan required and thus bring down the amount of EMI.
As far as the maximum quantum of loan is concerned, SBI can disburse up to 85% of the on-road price of the vehicle. The on-road price is an addition of ex-showroom price to RTO, insurance and other charges.
How to Use Tenure to Your Advantage?
The maximum loan tenure for a new and old car loan is 7 years and 5 years, respectively, at SBI. It’s always a tendency for most to opt for a longer tenure as they feel easy to repay a lower EMI that results due to the same. However, they fail to take into account the perils of such a move. Yes, you read it right!
The longer tenure leads to massive interest liability for the car buyers to service over the loan term. So what is the recourse? Do the exact opposite by choosing a comparatively shorter tenure to curtail the outflow of interest. You can’t understand the concept until you read the example shown below.
Example – Satish Agrawal and Chakrapani Mohanty are working in the same organization earning the same salary. Both opted for a loan of 8 lakh each. The interest rate offered to them was 9% per annum. While Satish opted for a 7-year tenure, Chakrapani chose a 5-year period to service the loan. Satish is repaying the loan at an EMI of ₹12,871, which is fairly lower than 16,607 to be paid by Chakrapani over the course of his credit. But the latter wins over the former in the overall payout of interest. Yes, Chakrapani would have to pay an interest of ₹1,96,401, substantially lower than ₹2,81,186 to be paid by Satish over the course of the loan.
How to Operate SBI Car Loan EMI Calculator?
After reading facts and examples, it’s time to operate the calculator and compute the cost you are likely to bear on a car loan. Just enter the loan amount, interest rate and tenure in the calculator to find the indicative EMI. The calculator will also show the amount of interest expected to leave your pocket over the loan tenure.