To what can be called as a major development in the banking sector, people can now find out the interest on loans, monthly EMIs, etc. online using EMI calculators. Although these are easy to use and are helpful in every manner, some people still refrain from using such calculator, and others who do use them have certain doubts. Thus to help you get a clear picture of such a calculator, what it does and how it is helpful, this article highlights some of the common questions about EMI calculators and the answers to them.
What is an EMI?
An EMI is an equated monthly installment that the customer has to pay to the bank each month so as to pay back the loan he/she has borrowed.
What are the factors that determine an EMI?
Generally, an EMI consists of a principal amount plus the part of the loan interest. When you add these two, the sum becomes the EMI. Being precise, EMI is an asymmetrical combination of principal and the interest rate. In the initial years of loan repayment, interest amount constitutes the major portion of the EMI while the principal amount is much less. However, as the loan term deflates, the EMI majorly constitutes of the principal amount and only a small portion is the interest.
What is an EMI calculator?
An EMI calculator is an online tool that can help you find out the EMI that you’ll have to pay each month to repay the loan. To calculate the EMI using the calculator, you simply have to input the details such as the principal amount, tenure and the rate of interest. The calculator will tell you the monthly EMI which you have to pay to the bank to pay off the loan.
Where are EMI calculators available?
EMI calculators are readily available online on the bank’s official website and also on the websites of several Non-banking financial institutions. In addition to this, there are independent calculators available on the internet as well. These calculators are also accessible as Smartphone apps that you can download and use anywhere, anytime for free.
Are EMI calculators accurate?
In most cases, these EMI calculators are accurate but always check with your bank/NBFC about the monthly EMI before getting a loan. This does not question the reliability of such calculator; instead, it is necessary because many times lenders change the interest rate on the loan at the last moment and this affects your EMIs as well. Thus it is wise to get an idea of the EMIs using such calculator but also check with the lender as well to be accurate.
Are EMI calculators and EMI stimulators same?
No, they aren’t. An EMI calculator tells you the exact amount that you will have to pay each month as EMI, whereas an EMI stimulator gives you a number that is based on several considerations.
Why should I use an EMI calculator?
EMI calculators are easily available online and are simple to use. It is an appropriate option for those who want to check their EMI affordability by calculating the principal amount, tenure and the interest rate on a particular loan type. Also, these calculators are absolutely free and you can make as many calculations you want with different data to calculate the EMI that you can easily pay. A calculator will help you find a loan that is affordable and easy for you to repay.
So if you are applying for a loan, make sure you use such a calculator. This will give you a fair idea of how much the loan would cost you. Once you are happy with the numbers, you can visit the bank to apply for the loan.