Loan Principal Amount
Loan Tenure
Loan Interest Rate(Annual)
EMI payments starting from
Monthly EMI
0
On a principal loan amount of 5,00,000 at 15% for 12 year(s).
Managing your finances can often feel overwhelming, especially when it comes to loan repayments. Whether it's a home loan, personal loan, or car loan, knowing how much you'll need to pay every month is crucial to financial planning. This is where an EMI calculator becomes your best friend. But what exactly is an EMI, and how does an EMI calculator online make life easier? Let's dive in!
What is EMI?
EMI stands for Equated Monthly Installment—the fixed amount you pay every month to repay your loan over a specified period. Each EMI has two components: the principal (the loan amount) and the interest. Initially, a larger part of your EMI goes towards paying off the interest, and gradually, as the tenure progresses, more of it goes towards reducing the principal.
Let's understand this using the above example. Suppose the price of an iPhone is ₹1,30,000, and interest rates are 15%. You will decide to buy this iPhone on 26th September, and the tenure for credit is a year. Then, you have to pay every month ₹11734. Now, let's understand how to use this calculator to compute monthly payments.
How to use Loan EMI Calculator?
Using an EMI calculator for loan is incredibly simple. In just a few steps, you can calculate the exact amount you need to pay monthly. Here's how you can do it:
- Enter Loan Amount: The total amount you've borrowed or plan to borrow.
- Set the Interest Rate: Add the interest rate offered by your lender.
- Select the Loan Tenure: Decide the duration over which you want to repay the loan.
- Click Calculate: The calculator will instantly show your EMI amount.
However, with the help of this calculator, you can easily calculate the approximate cost of monthly payments.
What is the importance of an EMI Calculator Online?
Now, let's understand the importance of an EMI calculator for loans
- Quick & Accurate Calculation: It helps you to calculate monthly installments without manual errors.
- Time-Saving: Instead of manual calculation, an online calculator quickly gives results, saving you time and effort.
- Financial Planning: Knowing your monthly installment in advance helps you budget your monthly expenses and reduce your financial risks.
- Loan Comparison: You can easily compare different loan offers by adjusting the principal amount, interest rate, and tenure, allowing you to choose the most affordable option.
- Free and Easily Accessible: Most calculators are available online for free and can be used as many times as needed, making them accessible to everyone at any time.
The Challenge of Loan Planning Without an EMI Calculator
Imagine you've taken out a loan, only to realize later that the EMI is straining your monthly budget. Without prior planning, the repayment burden can snowball, leading to financial stress. However, it can be easily avoided with a simple tool like an EMI calculator for loans.
By calculating your EMI before taking a loan, you ensure that you're well-prepared and avoid any unwelcome surprises down the line.
How do EMI Calculators work?
These calculators use a formula to calculate the monthly fixed amount for a credit, which has to be paid on a specific date of each month. The formula is:
EMI = P x R x (1+R)^N / [(1+R)^N-1]
Where:
P = Principal amount
R = Monthly interest rate
N = Loan tenure in months
Please note that the rate of interest (R) on your credit is calculated per month.
So, to calculate the interest rate for each month, use the following formula.
R = Annual Rate of interest/12/100
Let's understand how this calculator works using the above example:
In the example above where the cost of an iPhone is ₹1,30,000, and interest rates are 15%. You will decide to buy this iPhone on 26th September, and the tenure is for a year.
In this case,
P = ₹1,30,000
R= 15%/12= 0.0125
N = 12 Months
By applying the formula, you can calculate the EMI as follows:
EMI = 1,30,000 * 0.0125 * (1 + 0.0125)^12 / [(1 + 0.0125)^12 - 1]
The monthly installments for the iPhone purchase, with a price of ₹1,30,000 and a 15% annual interest rate over a year, come out to approximately ₹11,733.58 per month.
How to Calculate EMI Online?
Calculating EMI online is a simple task with the EMI calculator available at Elearnmarkets. Simply visit our EMI calculator online page, input your loan details, and hit calculate. You'll instantly get your monthly EMI, along with an amortization schedule that shows how your payments are distributed between interest and principal throughout the loan tenure.
FAQs
What are the Benefits of Using an EMI Calculator?
A loan EMI calculator is a valuable financial tool that provides a quick and easy way to calculate your installments each month based on various factors. This allows you to align with your financial goals, enhance your debt management, and even save money on interest.
What is the formula to calculate EMI?
The formula for calculating EMI is-
EMI = P x R x (1+R)^N / [(1+R)^N-1]
Where:
P = Principal amount
R = Monthly interest rate
N = Loan tenure in months
Please keep in mind that your interest rate (R) is calculated on a monthly basis.
To compute the interest rate for each month, use the formula below.
R = Annual Rate of Interest/12/100
How is EMI calculated on a loan?
The formula for calculating the monthly cost for loans is the same, i.e., P x R x (1+R)^N / [(1+R)^N-1].
However, please note that this formula does not consider the additional costs, like processing fees, that may be incurred during the loan process.
An EMI calculator for loans is an essential tool for anyone planning to take out a loan. It not only saves time but also provides clarity on how much you'll need to pay each month. Whether you're planning to buy a new phone or take a loan, use an EMI calculator online to make informed decisions. Understanding your financial responsibilities ahead of time ensures peace of mind and better financial planning.
Take control of your loan repayments with our easy-to-use EMI calculator at Elearnmarkets!