Whether a
person applies for a home loan, personal loan or car loan, he/she has to pay an
Equated Monthly Installment. Soon after a person chooses to apply for a loan,
he/she needs to research on the types of loans available in the market. Today,
banks and NBFCs offer all types of loans in the market.
As you take
advance cash from the financial institutions to purchase a dream home or car,
it is evident that you have to pay back the borrowed money. Further, you also need
to pay the interest along with the principal loan amount. The loan is paid back
in EMIs and the EMI calculator makes it easy for the applicant to calculate the
monthly installments.
EMI is the
fixed monthly installment paid for the loan availed on a fixed time period
including interest component for the period and a contribution towards the
principal loan amount. EMIs depend on various factors and three important are
the rate of interest, the loan amount, and the tenure of the loan.
Types of EMI Calculators
There are
numerous types of EMI calculators available for the evaluation of different
kinds of loans:
- Home Loan
- Unsecured Business Loan
- Personal Loan
- Loan against Property
- Loan against Shares
- Machinery Loan
- SME/MSME Loan
- Loan for Working Professionals
How to Calculate EMI?
To calculate
the EMI, you will need three variables such as the loan period, the interest
rate, and the present value. The interest rate is taken as a monthly rate as
installments are paid on a monthly basis. For instance, if the rate of interest
is 10% then, you have to divide it by 12. Also, the tenure is supposed to be
the number of months. So, if the period for loan tenure is 20 years then, the
tenure is supposed to be 20x12 = 240 months. As per the calculation, the EMI on
a loan of Rs 50 Lakh at 10 per cent interest rate with a time period of 20
years will be Rs 48,251.
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