If you are planning to avail a loan or have already availed of one, then you might be well aware of the importance of EMI calculator apps. However, how they make things relatively easy and help you plan your finances in advance is just remarkable.
Around two and a half months ago, I was planning to avail a personal loan. One of my colleagues suggested I use an EMI calculator; believe me; this was one of the best suggestions I ever got.
What is an EMI?
Equated Monthly Installment or EMI is a fixed payment amount made by a borrower to a lender on a specific date each month. These are usually used to repay loans, such as home loans, car loans, or even personal loans, over a particular time period.
This monthly amount is calculated based on the loan amount, the rate
of interest charged by the lender, and the loan term. It further includes both the principal amount and the interest, and the borrower is required to pay this fixed amount every month until the loan is fully repaid.
What is an EMI calculator?
A tool that helps individuals calculate their EMIs for various type of loans. It is quite a convenient way to estimate the monthly repayment amount before applying for a loan. In order to use this tool, you typically need to input the following information:
Amount – The total amount you plan to borrow
Rate of interest – The rate at which interest will be charged on the loan
Tenure – Duration over which you’ll repay
(Tip: Download EMI calculator app from Play Store/App Store.)
How EMI Calculators Simplify Complex Loan Calculations?
● Accurate results
Such tools use pre-programmed formulas to compute EMIs, making the calculations much faster and error-free compared to manual calculations. In addition, with just a few inputs, the calculator instantly provides the EMI amount, making it convenient and much more reliable.
● Consider Multiple Parameters
EMI calculators consider various parameters, such as loan amount, interest rate, and loan tenure, to calculate the EMI amount accurately. In addition, they handle complex mathematical formulas and ensure all relevant factors are considered to determine the precise EMI amount.
● Easy Comparison
EMI calculators allow you to input different values for the amount of loan, rate of interest, and tenure, enabling you to compare different loan options quickly. By adjusting these parameters, you can see the impact on the EMI amount and choose the most suitable option that fits your budget. One of the best emi calculator app is Bajaj Finserv. Highly recommended!
● Detailed Repayment Schedule
In addition to the monthly EMI amount, many calculators provide a detailed repayment schedule. This shows how each EMI is allocated between the principal and interest components. Further, it also shows the outstanding loan balance after each payment, giving you a clear picture of the progress of your loan replacement.
● Financial Planning
EMI calculators assist in financial planning by helping the borrower understand the loan’s affordability. By inputting different values, you can determine the EMI that comfortably fits your monthly budget and finances.
How to calculate EMI using calculator?
To use this tool, you don’t need to understand any rocket science! Here is a step-by-step guide:
- Gather the necessary information, i.e. loan amount, interest rate and loan tenure.
- Open the EMI calculator
- Input all the details
- Choose repayment frequency
- Tap on “Calculate”
- View the result