EMI Calculator

EMI Calculator

While taking loans are a relief, they can also be a pain if you have to pay them in full and with also heavy interest. To assist in such situations, EMI is great. You must have heard of EMI before, but if you’re confused about whether it’s for you or not and how you can calculate EMI, then this article is for you. In this article, we will be covering all the details about EMI, what it is, what its advantages are, how you can opt for EMI, how our EMI calculator works, and how it will benefit you.

What is EMI?

Without further ado, let’s know what EMI is. Despite the apparent advantages of the EMI payment plan, a significant number of consumers are still unaware of its existence. It comes as a bit of a surprise, given that EMIs have been around for a number of years and that financial institutions are strong supporters of their use. A borrower will make a predetermined payment to a creditor on the same day of each month in order to fulfill the terms of an equated monthly installment, often known as an EMI. The monthly EMIs include payments toward both the interest and the principal of the loan, and the loan is paid off in its whole after a certain number of years.

Different Types of EMI

There are many different types of EMI that serve various offers according to the customer’s needs. Some of them are mentioned below.

EMI for Car Loans

One of the most significant purchases a person can make is purchasing a vehicle. To finance such a sizable purchase, you might want to consider applying for a car loan. The monthly installment payment (EMI) for a car loan is often expected to be repaid to the lender within the allotted time frame, together with any applicable interest. In the event that you are unable to make the payments on time, your vehicle may be repossessed and sold at auction to recoup the remaining sum.

EMI for Home Loans

Buying a home isn’t easy, considering how expensive they are. EMI proves to be really helpful in such cases but home loans typically have very high-interest rates, as well as very long repayment terms. The repayment of it necessitates the use of strategic planning.

EMI for Education Loans

In recent years, it has become increasingly difficult for parents to afford a good education for their children due to the quick pace at which the expense of school has increased. An education loan is one of the better possibilities that a parent can choose to fund the cost of this. A student may obtain one of these loans in order to finance their education either within the state or even outside of it. After a grace period, the initial monthly installment (EMI) of the loan will need to be repaid with interest.

EMI for Personal Loans

Personal loans are typically taken out for a variety of reasons, including covering unexpected medical expenses, going on vacation, relocating, getting married, or making improvements to one's house. Because they are unsecured loans, the interest rates are typically higher, and the terms are typically for a shorter period of time.

What are the advantages of EMI?

It is much simpler for borrowers to create a personal budget when they are aware of the exact amount of money that must be paid toward the principal of their loan on a monthly basis, which is one of the benefits of having their loan paid off via an EMI.

You are able to make immediate purchases of pricey things through the use of an EMI option, even if you do not have the finances necessary to make the full payment at the time of the purchase. If you are a salaried individual, for example, it will be much simpler for you to buy the property or car of your dreams if your loan comes with an EMI choice rather than a lump sum payback option.

Because the amount of each monthly payment is predetermined and spread out throughout the duration of the loan, the EMI option will not put a significant strain on your finances. As a result, you will be able to make further investments and spend money in other areas.

Another great advantage is that you will be able to determine your monthly outflow by using EMI calculators that are available online, like our EMI calculator at CalculatorSeek. Our EMI calculator will take into account the principal amount, the interest rate that is being charged, and the time span. Using your money to prepare for and pay for other expenditures and investments is a simple and straightforward process.

The EMI Calculator: What Is It?

The Equated Monthly Installment (EMI) Calculator is a useful tool that assists you in determining the amount of money that must be paid back toward your loan on a monthly basis. You may determine the amount of the monthly installment payment (EMI) for a car loan, home mortgage, bike loan, or personal loan by using the EMI calculator. You are provided with an estimate of the monthly repayments that are required for these loans.

Our calculator for EMIs consists of a box with three sliders in it. These sliders correspond to the loan amount, the loan tenure, and the rate of interest. After you use the slider to enter the relevant information, the EMI calculator will tell you how much you need to pay off each month in order to pay off the loan within the amount of time that you have selected.

How Does the EMI Calculator Work?

Our EMI calculator calculates the monthly loan repayments by using a formula. We will go into detail about how this formula works and also indulge you with a few examples so you can understand it better.

Our EMI calculator uses the following formula:

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

Let’s see what each variable represents.

E denotes “EMI,” which is the monthly payment you will be paying.

P represents the "Principal Amount."

This is the initial sum that the bank or other lender extended to you as a loan. Your requirements and the reasons behind the loan will determine the amount of money that you can borrow. The larger the total amount that you borrow, the greater the monthly payment that you are required to make toward the loan.

R stands for the 'Rate of Interest.'

This is the annual percentage rate (APR) that will be applied to the principal amount of the loan. The annual percentage rate (APR) that you are charged will be different from one type of loan to another and from one lender (bank) to another when you take out a loan. Before deciding to take out a loan, you should look into the interest rates offered by a number of different financial institutions because the interest rate has a direct role in determining the total amount of your monthly installment payment (EMI).

N denotes the total number of years the loan has been taken out.

The term "tenure" refers to this time frame. The whole amount of time that is allotted for the borrower to repay the loan is referred to as the loan's duration. Because the repayment is made on a monthly basis, the time of the loan is measured in months rather than years. Therefore, a period of two years is equivalent to twenty-four months, and so on and so forth.

Let's take a few examples:

Imagine you took out a loan of 5,00,000 for five years at an interest rate of 6.5%, which means

P = 5,00,000 R = 6.5% N = 5 years

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

E = [5,00,000 x 6.5% x (1 + 6.5%) ^ 5]/ [(1 + 6.5%) ^ (5 - 1)]

E = 9,783

Along with monthly payments, our calculator also tells about the total interest you will be paying on loan and the total amount you will be paying back.

Let’s take another example.

Imagine Zahid is thinking about taking out a loan for the car he has been dreaming of for the past few years. The car costs around 10,00,000, so he takes out the loan of 10,00,000 for four years at the interest rate of 10%.

P = 10,00,000 R = 10% N = 4 years

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

E = [10,00,000 x 10 x (1 + 10) ^4]/ [(1 + 10) ^ (4-1)]

E = 25,363

Check out our EMI calculator now to find out your monthly loan repayments.

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