How Are Emi Calculators Helpful?

The loan market in India is steadily increasing and is currently the fourth-largest loan industry in the world. A vast majority of these advances are short-term loans like personal loans and credit cards. A combination of these account for about 78 per cent of all credit lending in India. Loan repayments in India include EMIs, and you should consider the amount for accurately planning the current and future finances.

When you talk about EMI calculator, there are many to choose from. At the same time, you learn its usage for calculating the exact EMI amount which you are liable to pay.

Benefits of the calculator –

The number of loan applications is increasing and reached up to 107 million accounts at the end of 2018 financial year. Regardless of the kind of the loan you apply for, be it secured or unsecured, you must know how much monthly instalment you need to make before getting one. This is where a loan calculator is immensely helpful.

• It assists in calculating the estimate EMI amount, which helps you plan your finances accordingly. Make sure to maintain the debt-to-income ratio around 40 per cent for maximising the loan approval chances.
• The calculator saves your valuable time, and you need not involve in complex calculations, which can be time-consuming.
• There are no chances of miscalculation, offering you accurate estimate every time.
• There is an EMI calculator for each kind of loan. The EMI breakup of a home loan, for instance, is different from that of a personal loan.

EMI calculation –

The formula used in EMI calculator is as follows:

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

Where,

P is the loan amount

R is the interest rates

N is the loan tenure

It is the standardised formula used across the lender’s portal. Some variables could be added depending on the type of loan selected.

Loans and calculators –

You can use the loan calculator for different loans such as personal loans, business loans, car loans, two-wheeler loans, home loans, and so forth. All you need is the interest rates, tenure, and principal amount details. At all cost you need to maintain the debt to income ratio, else your monthly financial plan goes for a toss.

If you fail to repay the EMIs, the lenders have default charges in place. This means you need to pay additional money.