An EMI calculator is used to calculate the monthly amount that one needs to pay towards a loan. In other words, an EMI calculator provides you with a clear idea of the amount you require to pay on a monthly basis in the form of EMI to clear your loan. EMI stands for Equated Monthly Installment. The appropriate definition of EMI is the total interest amount and principal amount divided by the entire tenure, that is, the number of months in which the loan has to be refunded to the banker. The formula to calculate EMI is:
EMI = [P*R*(1+R) ^N / [(1+R) ^N-1]; where E= EMI, P= Principal loan amount, N = Loan tenure period and R= Rate of interest per month.
Now, let’s discuss all these factors in detail.
- Principal amount
The principal amount is the amount that a person has borrowed from a bank. This amount directly affects your EMIs. It is the loan amount provided by the bank on which the interest will be calculated.
- Interest rate
The interest rate is the rate at which the interest is charged on the amount borrowed. It is the percentage of the principal amount which is taken as a loan.
- Tenure period
The tenure period is the duration of time within which you have to repay the loan. A shorter tenure increases your EMI amount, and a longer one makes the EMI amount smaller.
The interest component of EMI is higher during the initial period; it gradually decreases with the passing years as more and more qr code payment is made.
Advantages of using an EMI calculator include help with adjusting the monthly budget, a good credit rating, accurate results, and ease of access.
The credit card EMI calculator tool helps you calculate the interest rate and monthly EMI on your credit card. Before taking a loan, you have to know about the EMI amount that you are required to pay every month. Use the Credit card EMI calculator to calculate the monthly amount that you are required to pay against your repayment of the loan, based on the transaction amount, interest rate, and loan term. You can find this calculator on any website that lends money online.
A credit card is essential for calculating an EMI. But for a new customer, you have to calculate EMI without a credit card. The steps that you should follow are:
- Download the NBFC app from Google or Apple App Store.
- Then you have to complete the registration process, fill up a basic profile and income details, and upload all the necessary documents.
- You can then redeem the limit (registered mobile number) on the merchants’ POS terminal as a payment method to purchase the product.
Let’s take an instance to make things clear on how you can calculate the EMI and what the entire procedure is:
Someone named “X” applied for a home loan of 25 lakhs with BOB as the house he took a liking to was worth 30 lakhs. Let’s say X completed the whole procedure, and the home loan was approved for a tenure period of 5 years. This may be very simple to understand. But here, the problem emerges when X knows that the EMI for the loan will cost 54,121—paying this much EMI is a problem for X as X has a few other liabilities as well. So now, X has to manage the spending and cut down on investments. But if X had used the EMI calculator before, X would have got a clear idea of the expected EMI, and then X could have made arrangements according to that. X would then have had a choice to select a house costing a bit lower, as well as the second option, which would include going for a longer tenure.
Now, you should have a clear idea regarding what an EMI calculator is, how one can use it, and where one can find it. Furthermore, with technological advancement, one can access the EMI calculator online easily and calculate the EMI on one’s own quite efficiently.