Loan Calculator

Understanding the Loan EMI Calculator

The credit market in India is steadily on the rise. It is currently the 4th largest credit industry in the world, recording a CAGR of over 11% year on year. A vast majority of these advances are short-term credits such as personal loans and credit cards. Combined, these two financial products account for 78% of all credit lending in India. Loan repayments include EMIs and borrowers should consider the EMI amount to accurately plan their current and future finances.

There are several EMI calculators available online; one must choose an accurate EMI calculator and learn its usage to calculate the exact EMI amount they are liable to pay for a loan.

Factors Affecting Your Due Amount

There are certain factors you need to consider while planning for applying for a loan. Based upon your financial and repayment capacity, you will be required to calculate equated monthly installments (EMI). Here are a few factors to consider:

• Loan Tenure: A loan’s tenure may get reduced or extended. Subsequently, there will be an increase or a decrease in the EMI amount as well. Thus, considering the term of a loan is also an important factor that may affect your due amount.
• Rate of Interest: The rate of interest is a vital factor that will help to assess the installment amount owed. You can compare the product and opt for one which has a lower rate of interest so that your overall repayment stays low.
• Loan Amount: Choosing the loan amount is another significant factor for determining your EMI. Based on the loan amount you choose, your equated monthly installment will be calculated accordingly.

How can an online EMI calculator help you?

The number of credit accounts is growing at an even higher CAGR of 28% and has reached 107 million accounts at the end of FY18.

Regardless of the type of loan you want to avail of, be it a secured or unsecured advance, it is paramount that you know how much monthly instalment you have to make before you avail it. That is where an EMI calculator in India can be immensely helpful.

• It helps you get an accurate estimate of your EMI amount so that you can plan your finances accordingly. Make sure that your debt-to-income ratio is below 50% to maximize your chances of loan approval.
• It helps you save valuable time. You don’t have to do complex calculations manually, which can be quite time-consuming.
• It eliminates any chance of a miscalculation, providing you with an accurate estimate every time.
• It is highly specific for each type of loan. The EMI breakup of a home loan, for example, is different from that of a personal loan.

The formula to determine loan EMI amount

There is a specific formula that is used to compute the EMI amount for a loan:

Where: P is the principal amount, R is the rate of interest (monthly), and N is the loan tenure (in months).

Types Of EMI Calculator

There are numerous types of EMI Calculators that you can use to calculate your equated monthly installments for home loans, personal loans, car loans, etc.

• Home Loan EMI Calculator: Home loans usually have a huge loan principal amount and a long tenure. It requires strategic planning for its repayment. All you need to do is enter your loan amount, loan tenure, and rate of interest and the results will be calculated instantly.
• Car Loan EMI Calculator: Buying a car is one of the major investments one can make. You may require a car loan to fund this substantial investment. Often, a car loan’s EMI is supposed is to be repaid with due interest within a stipulated time to the lender.
• Personal Loan EMI Calculator: Personal loans are mostly taken to serve multiple purposes like medical emergency, vacation, relocation, wedding, home renovation, etc. Since they are an unsecured loan, they have a relatively higher interest rate and a shorter tenure.
• Education Loan EMI Calculator: To finance this cost, an education loan is one of the best options a parent can opt for. The loan’s EMI is required to be repaid with interest after a moratorium period.
• Loan against Property EMI Calculator: A loan against property is a type of secured loan that one can avail against a property owned by them. Be it residential, commercial, or land, any property can be mortgaged with the lender against a loan.

How to use the online EMI calculator?

The online calculator is easy-to-use and takes just a few seconds of your time. Here’s how:

1. Insert the variables vis-à-vis principal, tenure and rate of interest.
2. The calculated EMI value will be displayed immediately.

Advantages of using the online calculator

• It is entirely free of charge. Anyone can use it at any time, as many times as they want.
• It is 100% accurate every time.
• It’s fast and provides an accurate estimate instantaneously.