Commercial vehicle loans can be a boon for businesses that need to add new vans, trucks, or any used commercial vehicles to their fleet but are unable to do so because of budget constraints. These loans spread the cost of vehicle purchase over several months or even years, making the investment more financially feasible for a business.

Today, many lenders in the market aim to offer commercial auto loans at the best interest rates.  You need to make an effort to compare these options and select a financing solution that aligns with your budget and business needs. Before applying for the loan, you have to see to it that you can pay off its EMIs with ease without putting too much pressure on your business finances. One of the simplest ways to achieve this goal would be to use a commercial vehicle loan EMI calculator.

Using a Commercial Vehicle Loan EMI calculator

A commercial vehicle loan EMI calculator helps you to calculate the EMI you have to pay each month to clear the loan. It accounts for the total cost of the loan and converts the principal amount and interest into simple EMIs. Here are a few terms related to commercial vehicle loans that you should know before using a commercial vehicle loan EMI calculator:

• Principal loan amount: This is the amount of money you intend to borrow from a lender for the purchase of commercial vehicles. The principal loan amount would largely depend on the type of vehicles you plan to purchase, as well as the number of vehicles you need. For instance, a business needing just a single truck would require a lower loan amount than a transport company wanting to add more than one commercial vehicle to its fleet.
• Interest rate You would have to enter the rate of interest that the lender is charging on the commercial vehicle loan into the calculator. This rate signifies the cost associated with borrowing.
• Loan tenure: To calculate the expected EMI amount, you have to specify the duration over which you plan to repay the loan. Loan repayment tenure can be provided in terms of months or years.
• Type of loan repayment structure: Most borrowers restrict their loan search process to simply comparing the interest rate between lenders. However, this should not be the case. Lending on a flat interest rate versus a principal-reducing interest rate can considerably change your EMI amount. Hence, knowing the type of interest calculation approach used for a commercial vehicle loan is also extremely important.

A commercial motor vehicle loan calculator can be found on the website of any bank or NBFC offering such loans. There are many benefits associated with using such a tool before applying for a loan.

Doing EMI calculations manually takes a lot of time and is prone to errors. Hence, it is better to use an online calculator to accurately estimate your monthly repayments. As the calculation is made by a computerised system, there is no room for errors here. Moreover, you can also check the difference in EMIs by changing the loan amount or repayment period. You can keep experimenting with the loan amount and tenure on the calculator till you arrive at an EMI that your business can comfortably repay. This would help lower the chances of loan repayment defaults, which can incur greater costs for your business and even hamper its credit scores.