• English
  • Hindi
  • Bengali
  • Marathi
  • Telugu
  • Tamil
  • Gujarati
  • Kannada
  • Odia
  • Malayalam
  • Punjabi

How Does Car Loan Tenure Affect EMI Calculation?


by Mahindra Finance


February 22, 2024


6 mins read

car loan maximum tenure

If you plan to seek a car loan, determining your EMI is a crucial step to plan well. Among the various factors that determine your EMI, the tenure of your car loan or, in other words, car loan maximum tenure, plays an important role. EMI (Equal Monthly Installments) are fixed amounts of money that the borrower has to pay every month to pay off the loan, and this calculation is especially important when considering the maximum loan tenure for a car loan. It consists of both the principal amount and interest rate additions.

Therefore, managing your finances well is important to ensure timely EMI payments. So, how does car loan tenure affect EMI calculation?

Let us find out this and other details about car loan tenure and EMI calculations in greater detail:

Understanding car loan tenure

Car loans with longer tenure are lighter on your pocket as the repayment is stretched over the tenure, which is longer in this case. However, a car loan with a long-term tenure also means you may end up paying EMIs for a longer duration, and it's essential to carefully consider the implications of the maximum loan tenure for a car loan before making a decision.

On the other hand, if you opt for a short-term car loan, you can pay off your loan quickly, although with larger EMIs. Also, it's important to note that the interest rates tend to be higher for long-term loans compared to short-term loans, and this consideration becomes particularly relevant when assessing the car loan EMI maximum tenure.

Hence, the total cost of the car increases when you opt for a longer-duration car loan.

However, car loan maximum tenure often varies from one lender to another, with some of them offering up to ten years for loan repayments. Similarly, car loan minimum tenure can vary between lenders.

Understanding the car loan EMI maximum tenureis crucial to planning the EMI budget. In this respect, the formula for calculating car loan EMI can be highly useful. Here it is:

EMI = [PR(1+R)^N]/[(1+R)^N-1]

Where P is the principal amount

R is the car loan interest rate, and

N is the car loan tenure in months.

As you can observe in this formula, when the loan tenure “N” increases, the number of instalments also increases, resulting in a higher interest rate component.

You don’t need to use the formula and manually calculate your EMI for different tenures. Rather, you can use online EMI calculators that can do the calculations easily and quickly, allowing you to do the calculations as many times as you may require to find the best tenure, interest rate, and EMI for you.

Car Loan Tenure Options

Most lenders, including Mahindra Finance, offer car loans with flexible tenures to suit your needs, ranging from a minimum of 12 months to a maximum of 60 months (5 years), providing a comprehensive breakdown of options tailored to the car loan EMI maximum tenure.

12-24 months

  • Ideal for those with a larger down payment and seeking quicker ownership.
  • Expect higher monthly payments but lower overall interest accrued.

36-48 months

  • A popular choice for balancing affordability and repayment time.
  • Offers manageable monthly payments with moderate interest costs.

54-60 months

  • Suitable for those prioritizing lower monthly payments or financing larger vehicles.
  • Be mindful of potentially higher total interest paid over the longer term.

How to Determine The Ideal Car Loan Tenure

The initial step in choosing your car loan is to assess your financial situation and budget, taking into consideration factors such as car loan maximum tenure. This will give you a clear idea of how much money you are willing to spend on your car purchase.

Next, assess whether you require a long-term or short-term car loan, taking into account your future prospects and risk factors to make the most informed decision, including considerations such as car loan minimum tenure.

For instance, if you plan to start a new business or switch jobs, you may benefit from a short-term loan to become debt-free sooner. However, you should also consider factors such as the maximum loan tenure for a car loan.

After determining the tenure of your car loan, carefully select a suitable car loan online by comparing and analysing various options to arrive at a final decision. Considering factors such as car loan maximum tenure and car loan minimum tenure will help you choose the tenure that can prove to be the best for you.

Wrapping up!

Using a car loan to buy your favourite vehicle allows you to pay for it over a longer span of time. However, as you go shopping for a car loan, calculating the EMI of your car loan is important. Experience a seamless car ownership journey with Mahindra Finance. Our car loans are tailored to your requirements, offering up to 100% financing based on the ex-showroom value of leading brands such as Mahindra, Hyundai, TATA Motors, Maruti Suzuki, Renault, and more. You may wonder how does car loan tenure affect EMI calculation. This article is aimed at providing a detailed answer to this. Now you can consider factors such as car loan minimum tenure and maximum loan tenure for car loan to find the best fit.

Frequently Asked Questions (FAQs)

Q. What is the relationship between EMI and tenure?

For a constant principal amount, EMI and tenure have an inverse relationship. While longer tenures result in shorter EMIs, shorter tenures have larger EMIs due to quicker loan repayment.

Q. How much tenure is good for a car loan?

A good car loan is determined by an individual’s personal preferences and financial conditions. In general, shorter tenures allow faster repayment of the loans with a smaller interest amount, whereas longer tenure loans provide more affordability with a larger interest amount.

Q. Can I buy a car with a 40k salary?

Yes, it is possible to buy a car with a 40k salary with the right car loan. Manage your finances well and determine an amount you can pay monthly as EMIs. Then, decide the tenure and principal amount of your loan accordingly.

Q. Can I buy a car with zero down payment?

Yes, several banks provide car loans with zero down payment. Contact your nearest bank branch or seek advice online for more information. However, remember that these schemes often increase monthly EMIs and interest rates.

Q. What is the lowest EMI on a car loan?

The lowest EMI on car loans varies from one financial institution to another. Also, this EMI amount depends on various factors such as the cost of the car, loan tenure, interest rate, etc.

Related articles

5 Steps To Get A Car Loan Without Income Proof

Owning a car is not just about transportation, it represents unity, convenience, and cherished memories with loved ones. But what if you need a car loan without income proof? Many individuals face thi...


April 11, 2024


How To Get A Car Loan With A Bad Or Low Credit Score

Dreaming of owning a car? Whether it’s for convenience or luxury, getting a car loan can turn that dream into reality. But what if you have a bad or low credit score? Don’t worry; there ar...


July 1, 2024


How To Apply For A Car Loan For Grand Vitara

If you’ve been eyeing the Maruti Grand Vitara and dreaming of owning this stylish SUV, you’re not alone. With its impressive Grand Vitara NCAP rating, spacious interiors, hybrid powertrain...


June 19, 2024