EMI Calculator

India’s lending market has seen considerable growth in the past few years. Borrowers can now easily avail financial assistance in the form of personal loans, home loans or car loans etc., from various lenders. Besides an easier loan availing process, borrowers can experience hassle-free repayment by planning monthly payables, i.e. EMI, beforehand.

It is here that the importance of the EMI calculator comes up.

An EMI calculator is a tool that helps loan applicants/borrowers to calculate the amount they have to pay every month until it reaches the end of tenure. Depending on the financial products, i.e. loans such as car loans, home loans, personal loans, loans against property, you can use a monthly EMI calculator and learn the payable amount.

This calculator gives you a rough idea about the amount to be paid every month and plan financial expenditure accordingly.

An EMI calculator uses the formula mentioned below,

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

Here, P stands for the principal amount

R is the rate of interest

N is the loan tenure

This EMI calculation formula is standardised. Some variables can be added depending on the loan type.

With online EMI calculators, loan applicants can compute their monthly payables easily. For accurate results, provide the exact loan amount, tenure (in years), and interest rate (per annum).

This calculator shows instantaneous results as per provided data. You can try various combinations and arrive at an EMI amount which you can afford.

Following are the benefits of using an EMI calculator:

• Easy Calculation: Computing monthly payable is much easier with an EMI calculator. Loan applicants need to enter details of the loan amount, tenure, interest rate, and the results will be computed instantly. As there is no manual intervention, chances of miscalculation are nil.
• Easy Access: EMI repayment calculator can be found online. Therefore, individuals can use it at any time as per their requirements.
• Time-saving: The calculator used for computing EMI uses special programs through which it can show results quickly. This saves time as individuals need not visit banks or lending institutions to know their EMI amount in case they want to change their loan amount, tenure or get lower interest rates. Online EMI calculators help to complete these tasks in the blink of an eye.
• No Costs Involved: Since EMI calculators are available online and do not include a charge, individuals can use them without worrying about costs.

Equated Monthly Income or EMI can be segregated into two components, namely interest and principal. During the first few years of loan tenure, repayments focus more on the interest component and less on the principal component. However, after some years, i.e. towards the end of tenure, borrowers pay more principal amount and less interest component.

When individuals take a loan, they need to calculate their repayment amount, which they will pay throughout the tenure in equated monthly instalments. Hence, you must know the factors that affect EMI. Primarily this includes principal amount, interest rate and tenure.

• Principal: Principal is the amount individuals acquire from borrowers. It is one of the determining factors of EMI as interest is calculated as a percentage of this principal amount. Hence, borrowers must apply for loan amounts as per their needs and repayment capability.
• Interest Rate: Interest rate is another essential factor that helps to determine the overall cost of borrowing. That’s why it is important to conduct thorough market research to get the best rate of interest.
• Tenure: Tenure refers to the total borrowing time period. Tenure impacts loan EMI massively. If individuals opt for a longer tenure, they have to pay lower EMI but more money towards the interest (at the end of tenure). However, in case of shorter tenure, the interest amount will be lesser but result in higher EMIs. Hence, borrowers must assess their financial standing and choose tenure accordingly.

Note: Individuals can use an EMI calculator with prepayment option and pay off their loan faster to reduce their interest burden.

From the above discussion, you can get comprehensive knowledge about an EMI calculator, its calculation process, benefits and many other things. Read these details attentively to get a suitable EMI and ensure a hassle-free loan availing experience.