Taking a loan to purchase a new two-wheeler is a common occurrence in India. However, it is important to know how to calculate the EMI that one
might have to pay towards the two wheeler loan. This article explains how one can calculate the
same.
Two wheelers include motorcycles, mopeds and scooters, which are a common sight across all the Indian subcontinent. In 2016-17, India overtook China as the biggest market for two wheelers, buyers bought a close to 17.7 million units as compared to 16.8 million units sold in China during this period. The FY 2017-18 was the first time that the country witnessed the sale of more than 20 million two wheelers. From these data points, one can easily conclude that Indians love to own two-wheelers. It is easy to commute on two wheelers, especially in the congested roads in Indian cities. Additionally, they offer fantastic mileage and are affordable.
Two-wheelers– India’s Favourite Mode of Transport
Not only men, but even women prefer zipping around in two wheelers across various cities and towns in India. Most students start driving a two wheeler of choices as they come of age. There is enough space to store one favourite handbag or place one’s laptop bag or commute across the town with a friend. Two-wheelers can easily cruise through frustrating traffic jams.
Most importantly, these offer a sense of freedom to many who may have had to depend on others to get around. But most two wheelers cost around Rs 60,000 to Rs 75,000 on an average, which is much less than the cost of owning a 4-wheel drive. Spending this amount at one go may not be feasible for many. However, one doesn’t need to worry as several lenders are vying with each other to offer the best possible two-wheeler loans.
Before one decides to buy a bike on EMIby taking a loan, it is important that calculates the EMI beforehand to check whether it is affordable or not. For those not in the know, EMI is the Equated Monthly Installment which one has to make to the lender to repay the loan amount with interest.
The formula to calculate EMI manually is:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
Where
P is the Principal Loan Amount
R is the Rate of interest per month, i.e. [R = Rate of annual interest/(12*100)]
N = the tenure of the loan in months
For example, if one applies for a 2 wheeler loan of Rs 50,000 from the bank at 12% interest rate with tenure of 60 months.
Then in this case, R = 12/(12*100) = 0.01
Hence EMI = 50,000*0.01*[(1+0.01)^60]/((1+0.01)^60)-1) = Rs 1112
The total interest payable on the loan works out to be Rs 16,733
So total payment = Rs 66,733
Two Wheeler Loan EMI Calculator
However, this can be tedious and one may also end up committing errors, unintentionally. There is a far easier way to calculate two-wheeler loan EMI to buy a bike on EMI with the help of online two wheeler loan calculators. Visit the site of an NBFC, there will be an EMI calculator which show the EMI within seconds. One needs to enter details such as the principal amount, rate of interest and tenure (either in years or months) and the EMI along with the total interest payable are displayed almost instantly.