With a bike loan, financing your most desired two-wheeler can be easy and quick. However, planning and optimising your two-wheeler loan is crucial to help you manage your finances better. One of the ways to go about this is to assess your EMI and ensure that it fits into your budget.
Doing this enables you to repay on time, keeping your creditworthiness intact. Moreover, with bike loan EMI calculators available on most lenders’ websites, you can estimate your EMIs quickly and accurately.
Additionally, use of an online bike loan EMI calculator can help you compare different offers and choose the best one. Based on the estimates you get, you can plan your finances without having to undergo the hassle of manual calculations.
Read on to know more benefits of the bike loan EMI calculator and find out how you can use it.
As a borrower, you can use an EMI calculator to do a number of calculations. It not only helps you determine the right EMI, but also the ideal loan amount and tenure. This helps you zero in on a loan offer that is ideal for your finances.
All this calculator requires are a few details and you are good to go. By entering or choosing the
required loan amount, interest rate and tenure, you can compute your EMIs instantly. A bike loan EMI calculator works on the following formula:
EMI = [P x R x (1+R)N]/[(1+R)N-1]
Here,
Steps for Using a Bike Loan EMI Calculator
You can find an online bike loan EMI calculator on any lender’s website or app and this tool works on the same principle. Here are the steps you can follow to calculate the EMI for your two-wheeler loan.
Step 1: Enter the Principal Amount
The primary information you need to fill in is the loan amount. Note that this refers to the amount you borrow and does not include the down payment on your two-wheeler.
Step 2: Select Any Loan Tenure
Your loan tenure is the total duration or timeline over which you choose to repay your bike loan. With a longer tenure, your EMIs reduce but your interest outgo will be higher. This can increase your overall borrowing costs.
Selecting a shorter duration helps ensure higher monthly instalments but decreases the cost of borrowing. This is precisely why selecting the right tenure is crucial for financial planning.
Step 3: Input the Interest Rate
The next step is to key in the applicable interest rate into the calculator. Your interest rate depends on various factors like your tenure, loan amount, creditworthiness, etc.
Step 4: Check the Calculated EMI
Once you have added all the required information, you can see your payable EMI and total cost of borrowing displayed on the screen.
You can also change the tenure, interest rate and loan amount and try calculating, as many times as needed. Tweaking these variables helps you make the right decision about your bike loan and repayment schedule.
Advantages of Using a Bike Loan EMI Calculator
Now that you are familiar with the workings of an EMI calculator, here is a quick overview of the benefits of using one.
Helps Save Time During Repayment Planning
Using a pen and paper to calculate your EMI manually is a time-consuming method that is prone to errors. With an EMI calculator, you can complete this essential task within minutes. Simply enter all your details to get instant results with high accuracy.
Helps Calculate Affordable EMIs
When you avail of a bike loan, you are increasing your financial liability and monthly expenses. So, you need to choose the right EMI option by considering your monthly finances and existing liabilities.
With a bike loan EMI calculator, you can arrive at a feasible amount that best fits your budget with less effort and time.
Helps Compare Different Loan Offers
Since the financial marketplace features many different lenders, choosing a suitable one can be overwhelming. Different financial institutions may offer interest rates that are very close to each other.
Thankfully, an EMI calculator helps you compare various options with ease. It shows you how even a small difference in interest rates can have a big impact. This helps you choose a lender who offers you a bike loan with the most favourable terms.
Makes Planning a Bike Loan Hassle-free
With so many important details to consider when choosing the ideal loan, manual calculations or estimates just do not do the trick. Make the process quick and hassle-free by relying on an online EMI calculator.
Helps Determine an Appropriate Tenure
The interest rate and tenure share an inverse relationship. This simply means that with a longer tenure, lenders may offer you a lower interest rate and vice versa. You can compare various tenure options using an EMI calculator to select the right timeline for your loan.
Helps Plan Ahead to Save Time
Another advantage of using an EMI calculator is that it can help you prepare a plan for negotiating with your lender. Before applying for a bike loan, you can use the EMI calculator to determine the interest rate and tenure which is most suitable for you.
This gives you the data you need for a more informed discussion with your lender.
Factors Impacting Your Bike Loan EMIs
Whether it is a home loan or a bike loan, there are many factors that can affect your loan EMIs. Here are some factors that can impact your bike loan EMIs.
CIBIL Score
Lenders consider credit scores of 750 or above excellent when offering loans. With a better score, you have a better chance of availing a bike loan at lower interest rates. This significantly decreases your monthly instalments.
Age
When availing of a bike loan or any other form of credit, your age plays a crucial factor in determining your interest rate. Lenders associate borrowers closer to the retirement age with a higher risk. This is why younger applicants have a better chance of getting a loan at lower interest rates, which aids in reducing their EMIs.
Rate of Interest on a Bike Loan
The interest rate is one of the most important factors to consider when calculating your EMIs. As the interest rate on your loan increases, your EMI will also follow suit.
Down Payment Amount
Down payment is an amount you pay upfront as a lump sum when purchasing your two-wheeler. A significant down payment can reduce your EMI amount to a great extent. This is because you need to avail only the remaining amount as a loan, which decreases your EMIs.
Tenure of a Two-wheeler Loan
If you plan to close your bike loan early, consider opting for a shorter tenure. While you may have to pay higher EMIs, your borrowing costs will be lower. Conversely, your interest outgo will increase when you select a longer duration.
Your ideal bike loan EMI will depend on what works best for you financially. By using a bike loan EMI calculator, you can choose the right loan amount, tenure and lender. So, make sure you give time to this step during your loan planning process.
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