Loan Affordability Analysis: Determining Monthly Budgets Using a Two-Wheeler Loan Calculator
When it comes to purchasing a two-wheeler, many people rely on loans to finance their purchase. Two-wheeler loans provide a convenient way to own a bike or scooter without paying the entire amount upfront. However, before taking on any loan, it is crucial to analyze the affordability aspect to ensure that you can comfortably repay the loan amount. This is where a two-wheeler loan calculator becomes a valuable tool.
What Is A Two-Wheeler Loan Calculator?
A two wheeler loan calculator is an online financial tool designed to help individuals calculate the Equated Monthly Installment (EMI), which is the fixed amount that borrowers need to repay each month. It takes into account factors such as the loan amount, interest rate, and loan tenure to calculate the EMI.
How Does It Help In Loan Affordability Analysis?
By determining the EMI, potential borrowers can assess whether they can comfortably manage the loan repayment within their monthly budget and financial capabilities. This allows them to evaluate whether the loan is affordable and whether they will be able to make timely EMI payments without facing financial strain.
By considering the EMI amount in relation to their monthly income and expenses, borrowers can make informed decisions about the loan, adjust the loan tenure if necessary, and ensure that they can meet their financial obligations while owning the two-wheeler they desire.
Besides calculating the EMI, the two wheeler loan emi calculator also generates an amortization schedule, offering a detailed month-to-month overview of the loan repayment, including principal and interest payments, along with the remaining loan balance.
Here’s an example.
Let’s say you borrowed a two-wheeler loan with a loan amount of ₹1,00,000, an interest rate of 7% per annum, and a tenure of 12 months. Here’s the amortization schedule for the same.
| Payment Number | Payment Amount(in INR) | Principal Paid(in INR) | Interest Payment(in INR) | Outstanding Principal (in INR) |
| 1 | 8,699 | 667 | 8,032 | 91,968 |
| 2 | 8,699 | 613 | 8,086 | 83,882 |
| 3 | 8,699 | 559 | 8,140 | 75,742 |
| 4 | 8,699 | 505 | 8,194 | 67,548 |
| 5 | 8,699 | 450 | 8,249 | 59,299 |
| 6 | 8,699 | 395 | 8,304 | 50,996 |
| 7 | 8,699 | 340 | 8,359 | 42,637 |
| 8 | 8,699 | 284 | 8,415 | 34,222 |
| 9 | 8,699 | 228 | 8,471 | 25,751 |
| 10 | 8,699 | 172 | 8,527 | 17,224 |
| 11 | 8,699 | 115 | 8,584 | 8,639 |
| 12 | 8,699 | 58 | 8,639 | 0 |
Last Word
A high EMI might strain your monthly budget, making it difficult to meet other financial obligations. On the other hand, a lower EMI might extend the loan tenure, resulting in higher interest payments over time. Analyzing the EMI amount is, therefore, crucial to assess loan affordability. Keep the EMI within a comfortable range of your monthly income.
To maintain a healthy financial position, it is generally advised to ensure that your total monthly EMI burden, inclusive of other loans, does not surpass 40-50% of your monthly income. This will allow you to manage your loan repayments without compromising on your other essential expenses.
