Bike loans are one of the most common and preferred household financing options that people go for to meet their spending needs. These advances are available as secured loans and can be secured after fulfilling a handful of eligibility criteria only. Bike loans are available as high-value advances that come with easy documentation, loan processing, and approval. One can avail a bike loan based on down payment or may even opt for 100% bike financing as per the convenience.
However, what one must be assured of when borrowing is the loan’s overall affordability. One effective financial tool that can assist with affordability assessment of your bike loan is a bike EMI calculator. Lenders provide these tools to make the entire process of financing convenient and informed for aspiring borrowers.
Below given is a detailed understanding of what the financial tool encompasses, how to use it, and how to make the most of its available features. Let’s take a look at all of them one by one.
Bike Loan EMI Calculator: Meaning and Scope
A bike EMI calculator is a self-help financial tool that allows the user to derive various borrowing assessments based on the entries made. Depending on the sophistication of the tool, one can easily find a loan amount. And tenure that not only remains affordable but also make remarkable repayment decisions like when to prepay the loan. When to go for balance transfer and the likes.
Reputed financial institutions provide bike loan EMI calculators without any charges and for all individuals to use without any classification. You can easily find an EMI calculator hosted online on the lender’s official website. Several third-party providers and asset management companies also provide these calculating tools to make financing quick and convenient for people.
A bike loan EMI calculator is easy to use too. It has a user-friendly interface that does not require any expertise to operate. The results obtained are quick, saving significant time. A user can also be assured of its results’ accuracy since all calculations are made based on pre-set formulae fetched into the system. It thus eliminates all the need to go for lengthy and error-some manual calculations.
How to Use a Bike EMI Calculator?
As the user interface of a bike EMI calculator is simple, you may not find it much of a hassle to utilise it for loan affordability calculation even though you might not be well-versed with financial tools. Here are a few things that you need to know when using the calculator.
First, there are typically three entries that you need to make to a bike loan calculator. Whether you are using a basic one or a sophisticated one. They include –
1. The loan amount which you plan to avail, represented by ‘P’ meaning principal
2. The repayment term or tenure that would suit your affordability requirements. Expressed in months for the total number of years you seek to avail the loan for. Like 12 months for 1 year, 24 months for 2 years, 36 months for 3 years, and is represented as ‘N’ for calculations
3. The rate of interest that the selected lender levies on the two wheeler loan, represented by ‘R’ during computation
Secondly, a set formula is used for the purpose of EMI calculation, which goes as –
EMI = P x R x (1+R)^N/[(1+R)^N-1]
This set formula forms the basis for all other calculations that the computing tool can perform.
Coming to that, with a bike EMI calculator, following are the prominent results that you can obtain.
– EMIs or Equated Monthly Instalments that the borrower needs to pay for the selected loan amount, tenure, and applicable interest rate.
– The total interest accruing on the loan amount availed for the tenure duration selected.
– The total loan liability that the borrower would need to meet by the tenure’s end. Including the principal and interest components
Along with these, some sophisticated bike EMI calculators also provide additional results, which can include the following.
– A pie chart representing the percentage shares that the principal and interest values acquire our of the total loan liability payable. It helps the borrower better gauge the actual cost of the loan they would end up paying.
– An amortization schedule that would represent the detailed break-up of each EMI payable into the principal. And interest components along with the total loan outstanding by the end of each year of tenure completion.
While getting these results is simple, the tricky part to understand is that several assessments can surround these results. Which also broadly entail the benefits of a bike EMI calculator and how to utilise it at the best. Let’s take a look at some of them.
Top Benefits to Derive from a Bike Loan Calculator
When using a bike loan calculator, you may maximise its potential by keeping the following benefits in mind.
1. Suitable loan amount selection
While it might be tempting to apply for financing of the entire loan amount available as per your financial standing, doing so comes with its cost. First, a high loan value results in higher interest accumulation. Secondly, it also means high EMI creation, which loads your immediate finances severely with fixed liability. An EMI calculator allows you to assess both the outputs based on the entered amount so you can find the right loan amount.
2. Choice of the most affordable tenure possible
In the case of tenure selection, a long tenure means small EMIs but higher interest accumulation and vice versa. The calculator thus helps get the right balance between these two for better tenure selection.
3. Better view of interest recovery
Generally, the EMIs for these loans are front loaded means interest recovered towards the beginning are higher than later in the tenure. The amortization schedule allows a view of this charge to help you better decide on the suitable timing for your prepayments.
Along with a bike EMI calculator, financial institutions also provide other dedicated financial tools for better borrowing decisions. It is ideal to check out and use all these self-help tools to finally determine. How much you should borrow and for how long to get the best deals on available bike loans.