With high maintenance rates, parking issues and hiking fuel prices, buying a four-wheeler is an expensive deal. Owning a two-wheeler is the best alternative to these concerns. Two-wheelers are convenient for everyday commute and are easy on your pocket, as well. You can get a two-wheeler loan easily and the EMIs are also easy to manage. Let’s further discuss the EMI calculators and their usage.
What is an EMI Calculator?
EMI calculator is one of the online services that several banks provide these days. In these calculators, you can find an estimated EMI amount for your two-wheeler loans. You can add the details of the loans and get an EMI rate instantly.
EMI Calculation Formula for Two Wheeler Loan
The mathematical formula to manually calculate the equated monthly installment (EMI) for your bike/scooter loan is:
EMI = [P x R x (1+R)^N]/[(1+R)^(N-1)]
Here, the variables stand for:
EMI – Equated Monthly Installment.
P – The principal amount that is taken as a loan for the two wheeler.
R – The yearly rate of interest.
N – The number of months for which you took the loan.
To understand it better, let’s take an example. Suppose, you took a bike loan of Rs. 50,000 from a bank at an interest rate of 12% for a period of 2 years (24 months). Then, by using this formula we can calculate the EMIs that you will be required to repay every month to the bank.
Firstly, we need to convert the annual rate of interest into a monthly rate of interest, so the outcome would be, 12/12 = 1%.
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
EMI= [50,000 x 1/100 x (1+1/100)^24 / [(1+1/100)^24 – 1)
EMI= Rs. 2,354
Hence, the EMI to be paid every month on a bank loan of Rs. 50,000 for 2 years at an annual interest rate of 12% is Rs. 2,354. Here, the total interest amount to be paid will be Rs. 6,488 in 2 years. At the end of your loan tenure, you would end up paying a total amount of Rs. 56,488 against your principal loan amount of Rs. 50,000.
Use of EMI Calculators
These calculators are useful because they allow you to compare several loans from different banks while being in the comfort of your room. Now, you don’t need to visit several banks to have an idea of which loan will be perfect for you. This makes the decision-making process faster. This paired with all the information needed on the website makes it quick for you to get a loan.
Steps to Use an EMI Calculator
EMI calculators are pretty simple to use. There are some basic steps to follow before getting your EMI amount for your loan.
Follow the steps given below to get your EMI for a two-wheeler loan:
- Check Eligibility: Most bank websites provide services where you can check if you are eligible to get two-wheeler loans. Fill in the form they have and click enter. This gives you if you are eligible or not.
- Enter Loan Amount: Once you are eligible for the loan you can redirect to the EMI calculator and enter the loan amount you are looking to get from the bank
- Enter Interest Rate: The next step is to enter the interest rate of the loan you are looking to get from the bank. The interest rate details would be given on the information page of the bank website. In a lot of calculators, this field gets filled up automatically when you are eligible for the selected loan.
- Enter Loan Tenure: This is the tenure for your repayment of the loan. You can enter the tenure you are most comfortable with. The good thing here is, you can compare the EMI amount with different tenures and see what time period suits you the best.
With these steps, you are done. Just one click, and you will get to know the estimated EMI amount you need to pay in the desired tenure.
Most of these steps are common for all kinds of loans. If not, there are instructions given on the website to use the EMI calculator which are self-explanatory.
Features of Two Wheeler Loans
Here are some common features of two-wheeler loans:
- Manageable EMIs: Two-wheeler loans can have tenure between 6-12 months. This time period makes the monthly EMIs affordable and manageable for the working class individuals.
- Minimum Paperwork: These loans do not have elaborate paperwork. The documents required are always mentioned clearly and it is easier and faster than ever to avail these loans.
- Online Services: Most of the banks these days have several online services that can be very useful for customers. Some of these are automated repayment options, EMI calculators, detailed blogs about the loans, etc.
- Various Repayment Modes: with net banking and UPI, repayment of loans has become really easy these days. Banks have various facilities for repayments. Several net banking services provide scheduled payment options where you can schedule your EMIs and not worry about forgetting any dates.
List of Two Wheeler Loan Providers
Some of the leading two-wheeler loan providers are:
Frequently Asked Questions (FAQs)
Q: What is an EMI?
A: EMI stands for Equated Monthly Installments. EMIs are fixed monthly repayments you have when you take a loan from a bank. These EMIs are set for a fixed time period i.e. your loan tenure. EMIs help the customer repay the loan one installment at a time which helps the customer manage his/her monthly budget.
Q: How long will it take for me to get a loan?
A: Your loan processing period depends on your document submission and your eligibility criteria. Most banks usually process loans between 1-2 days.
Q: How do I know if I am eligible for a two-wheeler loan?
A: All the banks have the eligibility criteria for different loans mentioned clearly on their websites. You can check the official bank website for these details. For any confusion, there are helplines for different banks that you can call to get your confusions sorted.
Q: Do I need to be an existing customer of the bank to get a loan?
A: No, it is not necessary for you to be an existing customer of the bank to get a loan from that bank. However, it is easier to get a loan if you are existing customer since the bank also has your records and the eligibility criteria can be determined faster.