Loans have become an integral part of our life today as they help us achieve some common as well as some important goals. Be it buying an expensive gift for your loved one, buying a home, car, affording your kids overseas education, or hosting a grand marriage, loans play a vital role in our lives.
However, EMI is an important aspect associated with loans that can’t be ignored. EMI stands for equated monthly installment, which is the monthly payments made towards a loan we have opted for. An EMI component consists of both principal and interest. And as we progress with our borrowing and loan tenure, the portion of interest repayment reduces and contribution towards the principal repayment increases.
EMI Calculator
One can use an EMI calculator to calculate your monthly loan EMI pay-outs. Using an EMI calculator before you opt for a loan is quite useful as it provides you estimated EMI pay-outs. Hence, planning your finances becomes easier. You just need to enter the variables of your loan such as the principal amount, tenure and interest rate and it instantly gives the result which is the EMI. Along with your EMI, you get to know the total payable amount and how much is the interest component in it.
Here is how EMI calculators help you plan your finances:
Convenience
Earlier we used pen, paper, and calculator to do calculations regarding any loan. But now one can use an online EMI calculator to do these calculators. An EMI calculator can be easily found online, as it is present on the websites of the online lenders. These are simple to use and only require the necessary details. In return, it gives you all the details about your spread for the tenure.
Accuracy
When using a simple calculator or when doing calculations manually there are high chances of mistakes. These mistakes can be due to slight errors but can change your calculations to a great extent.
However, using an EMI calculator is quite easy and yields 100% accuracy.
Easy Calculations
When you are among the individuals who keep away from monetary calculations because of the complicated calculations, an EMI calculator is the one which can help you a lot. Just feed your loan details and get the result. Isn’t it simple? Moreover, you get the details of the calculations in an explained way.
It Helps You Choose the Right Lender
Different lenders give different offers and provide loans at a different rate of interest and for different tenure periods.
By using an EMI calculator, you can choose among the various lenders and can get one best-suited one for you. As based on the EMI, and total borrowing cost you can decide the lender.
It Helps You Choose the Right Loan Amount
In light of your prerequisites, you settle on a specific amount up to get. The borrowing is simple, but the repayments are demanding and need a ton of planning and hard work. Hence, it is always advised to borrow as per your requirement and repayment capacity.
By using an EMI calculator, you can get to know how much you need to repay, hence on this basis u can get to know your eligibility and can also analyze your repayment capacity. The best which can be done to enjoy a peaceful loan tenure is- use an EMI calculator. Know your EMIs in advance and if you can’t afford to repay a particular amount, you can reduce the principal amount to be borrowed, and then apply for a loan according to your budget and finances.
Planning your Finances
When you get to know your total cost of borrowing and EMI in advance, you can plan for your future goals respectively. Be it your retirement planning for planning your second home or any other investment. Knowing how much you are going to have after paying towards your EMI also helps you to plan your budget accordingly.
Why Do You Need it?
When you set your goal, be it your kid’s education or buying a car, you need to calculate the amount you need to save and the total cost of your borrowing. The obvious thing here is- the future value of your goal will be different from the current value because inflation will increase the value of the corpus you need. Hence planning is a must! And most importantly you need to know the total cost of your borrowing so that you can plan for the other things.
