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Utilizing an EMI Calculator to Determine Loan Instalments

Utilizing an EMI Calculator to Determine Loan Instalments

If you have taken a loan from a bank or any other financial institution, then you need to re-pay the same in monthly instalments. The same holds true for any kind of loan such as a car loan, home loan, personal loan, etc. EMI or Equated Monthly Instalment is one of the easiest and most convenient ways to clear your liability. Now, when it comes to paying the EMI, it is imperative to know the exact amount you need to pay the bank or NBFC. To find out the amount of your monthly outstanding accurately and easily, it is wise to use an EMI calculator.

How the EMI calculator helps you to know your loan instalment amount

Whenever you want to match your needs of building a house, buying a new car or bike, starting a business venture, or going for a vacation with the family, you need to apply for a loan. There are many types of loans available. The process to apply for a loan through a bank or an NBFC is easy. In return for the loan, the lenders levy a rate of interest. The financial institutions and banks in India offer a loan at different rates of interest. Some banks and NBFCs may charge a higher rate of interest than others and vice versa.

Along with paying the borrowed money back, you also need to pay the interest amount levied on the principal amount of the loan. So, it can be said that the EMI is made up of two amounts – the principal loan amount and the interest amount on the loan. Composed of the two, the EMI is calculated as a monthly amount you must pay back to the bank.

EMI Calculator

The monthly instalments can be efficiently calculated using the Axis Bank personal loan EMI calculator. EMI calculator is not just easy to use but also provides accurate figures to loan applicants. Equated Monthly Instalment are paid by the loan borrower to the financial institution until the repayment of the entire loan amount. Also, the interest and total principal amounts are calculated based on the tenure of the loan. Though the interest remains constant and the principal amount as well, the tenure changes the amount of the EMI. It is also important to note that with every EMI payment, the loan borrower starts paying more of the principal amount and less of the interest amount.

How to Use the EMI Calculator

Now that you know all about the EMI and EMI calculators, it is important to know how to use them. There are online EMI calculators that are widely available on the website of different banks, NBFCs, and several other lenders. Online EMI calculators simplify the calculations for loan borrowers. Once you have access to the top-quality EMI calculators available on the bank or the financial institutions portal, you just need to enter a couple of loan details and calculate the equal monthly instalments.

EMI Calculator follows this formula:

EMI = [P x r x (1+r)^n]/[(1+r)^n-1]

  • Here, P is the principal loan amount taken by the borrower.
  • r is the rate of interest that is charged on the loan amount by the lender.
  • n is the term or the tenure of repayment of the loan taken.

Benefits of Using an EMI Calculator

There are many advantages to using an online EMI calculator. Here we share some of them:

  • It is easy to calculate the EMI online. You just need to enter the fields such as principal loan amount, rate of interest charged by the lender, and loan tenure. Click on calculate to know the exact amount.
  • Many EMI calculators offer graphical charts and easy-to-understand representations. Online EMI calculators help loan borrowers not just calculate their EMI but also understand more about the loan.
  • EMI calculators do not leave room for errors. Unlike the traditional or manual method of calculation, they provide accurate results.
  • You can use online EMI calculators to calculate EMI for a range of loans such as car loans, home loans, personal loans, etc.
  • When you use online EMI calculators to know your liability, you know the exact monthly payment amount, interest amount, principal amount at a certain point after taking the loan, and more.
  • When you know your equated monthly instalment, you know your financial commitments. You also get to check whether you can afford this amount for a given tenure. If not, you can keep adjusting the tenure to get the desired affordable EMI.

You would have observed that with online EMI calculators, it has become extremely easy to calculate the equated monthly instalment. The moment you enter the details such as rate of interest, period of loan, and principal, you get to see the figure instantly. Other than the monthly instalments, you can also get to know your total payable interest.

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