Benefits of a Bike Loan EMI Calculator When Borrowing

Two-wheeler purchase today has been remarkably simplified with the presence of financing options like bike loans. These loans are specifically designed with the intent to make such purchases affordable for individuals across all income groups. Thus, these advances often come with competitive rates and charges, keeping the cost of the loan nominal. Lending institutions have also introduced dedicated financial tools that can help individuals make wise borrowing decisions based on the assistance of such computation. A bike loan EMI calculator is one such tool that is in common use today.

Let’s take a better look at what these tools are and what makes them crucial as well as beneficial for use before making a borrowing decision.

What is a Two-wheeler Loan EMI Calculator?

A bike loan EMI calculator is a financial tool dedicatedly designed to allow prospective borrowers assess their repayment affordability through different computations. It is pre-set with a specific formula for computation and works based on such formula only, thus keeping the results accurate.

Several reputed lending institutions provide EMI calculators for free, which makes them easily accessible to all, whether customers of the lender or not. It thus assists in making crucial borrowing decisions that ultimately determine your affordability.

The formula used for computation of different values in the calculator is as follows.

EMI – [P x r x (1+r)^N]/[(1+r)^N-1]

In this formula, P represents the principal value or the loan amount sought, r goes for the rate of interest, and N represents the time involved or tenure expressed in months.

So, while the above 3 are required as entries to the calculator for the process to initiate, the results obtained through such entry are –

  • EMIs payable
  • Total loan liability
  • Total interest payable

Some best calculating tools also present these computed values in a pie chart, which allows the prospective borrower to observe and understand the various values as a part of the total loan availed and the overall repayment liability. This can help make crucial borrowing decisions in the future.

Further, the bike loan EMI calculator also computes the amortization schedule. It is essentially a detailed account of EMIs payable throughout each year of the loan tenure, closely reflecting the total amount repaid and outstanding loan liability for the borrower. The EMIs are further broken down into principal component and interest component, which vary with each EMI even though the instalment values remain the same.

Uses of a Bike Loan EMI Calculator

A two-wheeler loan EMI calculator is useful in various ways when making a borrowing decision. Allowing you to assess your choices in detail through impactful computations. Here’s a detailed insight on how you can use the financial tool.

  1. Entering the loan amount, interest rate, and tenure value allows you to compute the EMIs payable throughout the tenure. This, in turn, helps assess your monthly repayment affordability.
  2. You can make changes to the values entered in the amount and tenure section to alter. EMI values as per your suitability and choose amount and tenure accordingly. When doing so, note that the amount and tenure entered impact the EMIs differently. While an increase in the loan amount will increase the EMIs too. An increase in the tenure will have an opposite impact on the instalment value. Accordingly, you must strike the right balance between the two entries to find the most suitable EMI value.
  3. As for the total interest payable, an increase in both the loan amount. And tenure increases the interest value and vice versa. EMIs low while also keeping the total interest payable in check.
  4. Another crucial use of an EMI calculator is that it helps make prepayment decisions discreetly. You can best decide the timing of your bike loan prepayment by assessing the pattern of increase or decrease in interest component for each EMI payable to maximise savings on total interest payable.

Lenders also provide bike loan eligibility calculators, another financial tool. That helps you assess your maximum loan availability based on your borrowing profile. It is advisable that you access these tools before applying for your bike loan so. That loan is easily manageable without the repayment liability straining your monthly or long-term finances much.

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