A loan is an ideal way to satisfy any financial requirement. Furthermore, different types of loans, such as a home loan, car loan, or even a two wheeler loan can be used for specific purposes. Alternatively, you have the personal loan and the loan against property that can be used for miscellaneous requirements.
But no matter the loan type, the fact remains that once funds have been borrowed, it must be repaid over a fixed period. At this stage, as an applicant, you should have sufficient funds to make the repayment. Do you have sufficient funds or income to repay both the loan amount and the interest rate? Furthermore, you should have sufficient funds to make the monthly payments through the EMI.
All these factors should be considered well before you even apply for the loan. But calculating these rates will be a tedious job, especially with the different loan rates and the competitor rates themselves.
This is where the EMI calculator will assist you. This calculator is used to calculate the ideal loan rates, by the given market rates. The details given below provide insight on how this tool will help calculate the EMI and how it can be used to estimate an effective loan cost:
Principal amount: The principal amount is basically the amount that you will want to borrow. Depending on the type of loan will you be applying for, the amount can have an upper limit. Take, for example, the loan amount for the loan against property cannot cap more than 85% of the loan. Furthermore, even if your financial profile allows you to access a high loan value, the loan amount you finally apply for should be easily repayable. The EMI calculator will help you calculate the ideal principal amount, thus ensuring that you can afford it before you can apply for it.
Interest rate: The interest rate applies to all the loans. However, the rate of the interest rate will differ from type to type. In certain loans, such as the personal loan, the interest rate is normally high. A high-interest rate would mean longer repayment tenures and higher EMIs. Therefore, it is crucial that you calculate the ideal interest rate. With the EMI calculator, you can calculate the ideal interest rate, based on the rate offered by the lender. In this way, you can easily get the EMI rate, along with the repayment tenure
Tenure: When you calculate the EMI you will also calculate the tenure of the period. Just like the interest rate, the tenure of repayment for certain loan types are fixed. For example, the tenure for a bike loan will be anywhere between a few months to a year, whereas for the home loan it can be up till 30 years. Since the EMI, comprising the principal amount and the interest rate is distributed through this tenure; you need to ensure that you get adequate time to repay back the funds.