In India, bike is not just a ride but an important part of everyday life. Be it college going students, working professionals or daily commuters, bike is the best means of pocket-friendly and reliable transport for everyone. But sometimes due to low budget, it seems difficult to buy a bike of your choice.
In such a situation, bike loan becomes the best option for EMI calculation. The special thing is that there are many great bikes available in the market priced less than Rs 1 lakh.
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Bike Loan EMI
It is easy to take a loan, but taking a loan without understanding the EMI calculation can prove to be a mistake. EMI means Equated Monthly Installment, that is, how much installment you will have to pay every month. If you calculate the EMI beforehand, then you have an idea of your budget and there is no financial pressure in the future. Understand it like before ordering food in a restaurant, you look at the menu and decide how much impact it will have on your pocket.
Value
Today, brands like Hero, Honda and TVS are offering great bikes in the range of less than Rs 1 lakh. These are not only affordable but are also pocket-friendly in terms of mileage and maintenance. This segment is perfect for students and first-time buyers. EMI calculation helps you decide in how many months’ EMI your favorite bike can be easily purchased.
EMI Calculation
EMI calculation formula is:
EMI = [P × R × (1+R)^N] / [(1+R)^N – 1]
Here P means Principal Amount (i.e. total loan amount), R means Interest Rate (Monthly), and N means Number of Months (Loan Tenure).
Suppose you have taken a loan of Rs 80,000 at 10% interest rate and have chosen a tenure of 3 years (36 months). Now on applying the formula, the EMI comes to around Rs 2,580 per month. This means that you can easily buy your dream bike without putting much burden on your pocket.
Down Payment
EMI in bike loan does not only depend on loan amount but also on down payment and interest rate. The higher the down payment you pay, the lower will be the EMI. On the other hand, if the interest rate increases even a little, there is a huge difference in EMI. Therefore, it is wise to compare the interest rates of different banks and NBFCs before taking a loan.
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Flexible Tenure
Loan tenure is also a big factor in EMI calculation. If you choose long tenure then monthly EMI will be less, but overall interest will be more. Whereas in short tenure EMI may seem a bit heavy but total interest is much less. So ultimately it is up to you to decide whether you want a small instalment every month or want to repay the loan quickly.