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The introduction of bike loans to the Indian financial market has proven to be a game-changer in how citizens purchased two-wheelers in the country. These financing options are available in high value and require you to meet only a handful of eligibility criteria. The repayment tenure for a bike loan is also extended and flexible enough to allow you to keep the EMIs low and affordable.

Some of the reputed financial institutions extending the advance also provide dedicated bike loan EMI calculators for free, hosting them on their websites for anyone to access. Let’s take a look at what this financial tool involves, its function, and how you can use the tool to avail maximum benefits.

What is a Bike Loan EMI Calculator?

A bike loan EMI calculator is a dedicated financial tool that allows individuals to assess their EMIs based on the loan amount sought and the repayment tenure selected. It allows you to plan your finances in the long term so the repayment remains convenient and you manage it without any delay or default.

You can use the calculator to change the loan and tenure values to assess different EMIs and arrive at the right loan quantum. Once the values are provided, the EMI calculator also reflects other loan values critical for repayment planning. They include the total loan liability payable, including the loan principal and interest component, the total interest payable for the selected tenure along with the EMIs payable throughout the loan tenure.

The calculator also reflects the amortization schedule based on which the lender will complete loan recovery. The schedule typically indicates a break-up of the loan EMIs into principal and interest component.

Note that these components vary for each EMI and can be a crucial differentiator when planning to prepay your bike loan. Lenders often keep the interest component high for EMIs payable during the initial few months of the tenure. As the loan term passes, the interest component keeps on reducing as the lender starts to recover principal. It is done so as to keep the risks of repayment default low.

Checking out the amortization schedule indicated in the bike loan EMI calculator, you can thus time your loan prepayment conveniently. Prepaying your loan towards the beginning of the tenure can be a smart financial decision as it would limit your interest payment. Similarly, when opting for a bike loan balance transfer, the same concept applies; wherein availing a balance transfer early on in the tenure can help save on unnecessary interest payment. Note that in both prepayment and balance transfer facilities, you must complete a number of EMI payments as specified by the lender before initiating to apply for the facility.

How to Use the EMI Calculator for Bike Loan?

Bike loan EMI calculators come with a simple interface which is easy to understand and use. To assess the EMI amount payable each month towards loan repayment, you need to follow the few simple steps given below.

Step 1 – Enter the loan amount you seek to avail.

Step 2 – Fill in a suitable loan tenure based on the financing value sought.

Step 3 – Choose the interest rate applied by your lender on the bike loan.

Once you have entered all the details, the calculator will immediately reflect the EMI value payable by you for the selected tenure and loan amount.

Although the interest rate remains constant as levied by the lender, you can make changes to the loan value and the repayment tenure to arrive at a suitable EMI for affordable repayment. When doing this, keep the following things in mind.

  1. The loan amount selected is directly proportionate to the EMI value computed. Thus, an increase in the loan amount you seek increases the instalment amount as well and vice versa.
  2. In case of tenure selected, its link with the EMI is inversely proportionate. It means that any increase in the loan tenure brings down the EMIs and a smaller tenure pushes up the instalments.
  3. Loan amount and tenure selected also impact the total interest liability created on the loan amount. Both loan amount and tenure are directly related to the interest accruing on your bike loan.
  4. In consideration of the point mentioned above, it might not always be wise to increase the loan tenure for EMI reduction. It is because such an extension would inadvertently increase the total interest payable despite a reduction in the immediate loan liability, thus making it costlier than affordable.

It would thus be wise to select a loan amount and tenure that maintains a reasonable balance between immediate affordability and total loan liability payable.

Reasons to Use an EMI Calculator for Bike Loan

You can use a bike loan EMI calculator to derive the following benefits thereon.

  1. Convenient planning: You can plan your two-wheeler loan repayment easily with the help of an EMI calculator that is both easy to use and understand.
  2. Accuracy: As a pre-programmed financial tool, an EMI calculator is almost always accurate in the results computed. You would thus need to provide the right values only to assess the EMIs and other liabilities created on the loan to be availed. It is not the case with manual calculations that stand a chance of erring.
  3. Fast results: An EMI calculator also allows you to arrive at the results almost immediately, which is much faster than any manual calculation you would make.

With these benefits in place and an array of options for financial analysis and planning, a bike loan EMI calculator can prove to be of crucial help when availing funds for bike purchase. Based on the results, you can choose a suitable loan amount and tenure, and proceed to apply for a bike loan with your lender, keeping the repayment affordable and convenient.

By Mayank

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