Applying For A Loan? Here’s How A Loan EMI Calculator Will Make The Decision Easier

By- Blogger Indifi

EMI is known as equated monthly installments. It is a fixed payment made by the borrower each month to repay the loan amount. The EMI is divided into two loan components. One is the principal amount, and the second is the interest amount. Whether you are applying for a personal loan, business loan, home loan, car loan, or education loan, EMIs are easy to calculate using the EMI loan calculator.

Three parameters based on which EMI calculator works:

• Loan amount.
• Repayment tenure.
• Rate of interest (offered by the lender).

Factors that affect the Loan EMIs

Above, we have discussed the main parameters on which loan EMI is based. Here are the factors that affect the EMIs.

Changes in the loan interest rate: There are three loan interest rates — fixed, floating, and hybrid.

When an interest rate offered on a loan is fixed, in that scenario, there are no changes in the EMIs.

A floating interest rate is linked to the marginal cost of the fund-based lending rate and can change the loan EMIs. As the rate is flexible, it keeps changing per the repo rate.

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If you have taken the loan on a hybrid interest rate, the interest rate is fixed only for a particular tenure. After that, it is on MCLR to decide the interest rate, and based on the determined interest rate, the EMI changes.

Tenure: When you opt for a loan transfer from one lender to another, there may be a possibility of change in the loan tenure. It will also bring changes in the EMI calculations. If the tenure increases, it will decrease the EMI. In case the tenure is reduced, EMI will increase.

Sample loan chart of a business company Image source: wikimedia commons

Loan prepayment

The loan amount of repayment is also a reason that affects a loan's EMI. If you make a loan prepayment, it reduces the outstanding principal amount, based on which the EMI amount or tenure is changed.

Benefits of using an online EMI calculator:

• Find out exact EMIs to be paid monthly for any loan.
• Saves time.
• Get a detailed overview of loans applied using the amortization schedule.
• Plan your monthly finances well in advance.

You can set multiple schedules and loan tenures. After a detailed schedule comparison, choose the one that suits well with your financial requirements.

Significance of loan amortization schedule in EMI calculator

A loan amortization schedule data shows the EMI break-ups. It shows how much EMI you need to pay for interest and what you will pay as the principal amount. It is one of the most significant advantages of using the EMI calculator. The EMIs that you pay as principal will keep reducing the loan's principal amount. It will also result in decreasing the interest amount. You will get to know all these things when you use the EMI loan calculator frequently. The amortization schedule is one of the essential features of an EMI loan calculator that helps design the proper prepayment schedule.

Also read: Taxation On Personal Load: An Essential Guide

The different types of EMI calculators

Home loan EMI calculator

Home loans are one of the most popular and common loans applied for in India. It has a long tenure and a sizable principal amount. Whenever you apply for a home loan, it is essential to do all the EMI calculations in advance. There are various home loan EMI calculators available online with every home loan provider. All that is required to calculate the EMI is the loan amount, tenure, and interest rate. Using a home loan EMI calculator can help you easily plan your finances.

Business loan EMI calculator

Like home loans, business loans also come with a massive principal amount and longer tenures. So, using the business loan online EMI calculator is a smart way to calculate the business loan EMIs. Requirements are the essential loan details, such as repayment tenure, interest rate, and the loan amount. Online, equated monthly installment is automatically calculated at the lender's website.

Personal loan EMI Calculator

Personal loans are multipurpose. It is the reason they are considered as the most applied loan to meet immediate financial requirements. For choosing the right loan amount, you must use the personal loan EMI calculator. It will help you to choose the best interest rate loan offer and tenure. Try to go with the shorter term to pay less interest on the principal amount.

Sample of External Loan amounts Image source: wikimedia commons

Education loan EMI calculator

Education costs increase each year and can cause financial strains on a family. If you are planning to send your child overseas for higher education by applying for an education loan, at that time, the EMI calculator proves to be the best online financial tool. It will help you to decide the right EMI amount where your daily expenses remain unaffected.

Simple interest loan EMI calculator

An EMI calculator is used to calculate the simple interest applicable on the loan amount for a specified tenure. It is one of the most accessible financial tools. All that is required is tenure, a simple interest rate, and the borrowed amount. After that, click on 'calculate' to know the exact EMI to be paid.

Loan against property EMI calculator

If you have any residential or commercial property registered in your name, you can apply for a loan against the property. It is a kind of secured loan, where the property is kept as collateral. To understand how EMI works under this loan scheme, use the loan against the property EMI calculator.

Conclusion

Overall, EMI loan calculators are one of the best financial tools to compare varied loan offers. It provides a clear picture of the total cost of the loan and respective EMIs to be paid monthly. Online EMI calculators are available on every lender's website; whether you are applying for a business loan online, home loan, car loan, personal loan, or any other loan, using the online EMI calculator can help. Just with a click of a mouse, you can keep control of your financial life.

The online EMI loan calculator has been programmed with the formula based on the loan applied. There is no need to worry about the accuracy of the result. All that you are required to share for the calculator to do its job accurately is the right amount, tenure, and interest rate offered by the lender.

Disclaimer: (This article is sponsored and include some commercial links)