Why Is It Important to Use an EMI Calculator Before Applying for A Loan?
If you think taking a loan to fulfill your financial need is the end of the story then it’s not. The loan comes with a liability of repaying the money on time and any single incomplete or late loan repayment can harm your credit score which will not be considered for the future loan application.
In the Indian economy, there might be anyone who has not taken a loan in their lifetime due to Financial needs. Whether to buy the home loan, car loan or even for the vacation, people take a loan to support their Dreams, so that they can meet their lifestyle and meet other Financial requirements, all these things depend on your monthly income which is impossible to achieve. The personal loan can avail for so many reasons like for medical emergency or travel or marriage or for education. No matter what your Financial requirements are, you will always get a specific loan for it. Taking a loan is not the end of the story as it is also coming with the liability of repaying the loan on time. Any delay in the loan payment can affect your credit score. Therefore, borrowers must always calculate EMI before they take a loan. Doing so gives you the overall idea how much money you have to repay to your lender. With the help of EMI, you can plan how to use finances before taking loan so that your monthly budget or monthly loan installments will not suffer. To calculate the business Loan EMI calculator its good to use Business Loan Calculator instead of home loan Calculator.
What is an EMI? You should know all the factors of EMI.
EMI stands for Equated Monthly Instalments. It is an important term that you will hear all the time when you apply for a loan. It’s a predetermined amount that a borrower is liable to pay its lender at a specific date of every month till the entire loan amount gets paid off. This amount is mutually decided and agreed by both the parties before a loan is sanctioned.
Besides the loan amount, borrowers are also liable to pay the interest amount calculated on the Principle amount Because the interest rate is charged every month, therefore, your loan EMI is made of two components first one is the principle amount you take and second is the interest amount calculated on your principle amount. To ensure that your loan does not get you into trouble, always pay your EMIs on time. You can pay your EMI through Auto Debit instruction or through Cheque, which will be required to send every month without fail.
How are EMIs Calculated?
To calculate a loan EMI, three Elements that hold utmost importance are the loan amount (principle amount), Rate of Interest and Tenure. An EMI is directly proportional to the rate of interest offered on the loan amount and inversely proportional to the loan tenure. It means that higher the rate of interest, higher will be the EMI and Longer the tenure, lesser will be the EMI.
If you have values of these three elements, then you can check how to calculate the Loan EMI. The formula for calculating the EMI is: –
EMI = [P x R x (1+R) ^N]/[(1+R) ^ (N-1)]
P= Principle Amount
R=Rate of Interest
N=Number of Instalments
You Can use this above formula to calculate the Loan EMI manually.
What is EMI Calculator?
EMI Calculator is an online tool that can be found on the internet under the dedicated name such as personal loan EMI calculator, Home loan EMI calculator and so on. For an instant, if you want to calculate EMI for home Loan, you can search on the internet like “Home loan EMI Calculator” keyword and you can choose any website for calculating the EMI. Many websites and Third-Party Site will provide this tool like loan EMI Calculator and Loan eligibility calculator it will help you to understand that you are eligible to avail the loan our not and how much EMI and Amount to have to pay every month when the loan gets disbursed.
Why using an EMI calculator before getting a loan is important?
Taking a loan is the best way to solve the financial problems or emergencies but apart from this loan is the obligation of repaying your debt on time. Many borrowers can fail to repay their loan on time. Before taking loan always check the EMI and suitability of repayments of your loan. Because EMI calculator is the fastest and the most accurate way of calculating your loan EMIs, therefore use it before applying for a loan helps you: –
Plan your Finance before taking a loan
Using EMI calculator, you can forecast the Loan EMI Easily and help you to pay your Loan EMI to your lender. An advantage of the EMI Calculator is that you can check whether you will be able to pay the payment or not so that you will not miss any payment.
Compare Different Loan offers
Before apply for loan shortlist the few loans offer and then decide what is the best deal for you and EMI is fall under your income or not. When you compare the loan, offer to make sure to check its interest rate. Sure, the rate of interest is an important consideration factor but there are other factors too like processing fees and foreclosure charges that must also be given equal importance to get the best deal.
Decide Loan tenure and the principle amount
Using Loan EMI calculators, you can Calculate the EMI for different loan offers. You can check the principle amount, rate of interest and tenor as many times as you want to see which EMI will suitable for you.
Before availing loan check your EMI with the help of EMI calculator whether it suits you are not.