EMI, which means Equated Monthly Instalments, is a sum of money that has to be given every month in order to clear a loan. The EMI is generally fixed, but the amount of principal or interest that has to be paid varies from one month to another. During the first few months of clearing the loan one is likely to pay more of the interest as EMI than the Principal amount.
When it comes to taking a loan, the first step involves calculating the loan amount that one requires and preparing for loan approval. The cost of the loan needs to be calculated and it can be best done with an EMI calculator.
A loan calculator will effectively help an individual calculate the amount of EMI that he will need to pay, along with the rate of interest that will be charged on the loan. Once this calculation is effectively done and the loan amount is fixed, an application to the respective bank should be made.
How does an EMI calculator function?
One needs to provide information like the loan amount one wants to acquire, the tenure of the loan, the rate of interest and the overall loan processing charges, in order for the loan calculator to calculate the EMI.
Once the above information is provided to an EMI calculator, it will offer the EMI that will have to be cleared, the entire breakup of the loan payment and will also offer view of the amortisation table, which will include the amount that needs to be cleared after every year of the loan tenure.
Some more advanced type of EMI calculators may also show a pie chart, offering the entire breakup of the loan.
Benefits of using a loan calculator
• An EMI calculator offers accurate numbers in a matter of seconds. One just needs to feed in relevant information into the calculator to get a clear breakup of the loan amount that needs to be paid back.
• It helps simplify the hassle of manually calculating the EMI of the loan and other related numbers. Thus, it effectively reduces the borrower’s confusion when it comes to complex calculations.
• An EMI calculator is a great tool when it comes to managing and planning finances. Comparisons can be easily made between the various interest rates and other offers given by different banks. One can put in a number of different combinations and choose the bank that offers the best deal.
A number of different loan calculators are available on the website of various banks online. One can easily take the help of this calculation tool to plan his loan.