# EMI Calculator

## What is EMI Calculator?

A loan is a financial deal between a lender and a borrower. In accordance with this Agreement, the lender gives the borrower a specific amount of money in order to reimburse the borrowed amount as monthly payments for a predetermined period of time by the borrower. The easiest way to determine your monthly payments and to balance your budget is to use an EMI calculator. Everybody has to borrow a loan, whether to buy a car or a house, finance their child’s education, or consolidate debts.

Nowadays, loans have thus become an important part of everybody’s life. Loans may be used for different purposes, but the key components of loans always remain the same, namely the loan amount, loan tenure and interest rates.

#### How Personal Loan EMI Calculators Work?

The calculation of EMI’s personal loan is a long and sophisticated calculation, which for most of us can be complex. In order to calculate the EMI, you must know the amount of your personal loan, the tenure you want to borrow and the interest rate on your personal loan. The loan’s tenure should be converted to months before replacement in the following formula for EMI personal loan calculations.

#### Loan amount, Tenure & EMI

Goal that you can quickly settle on your choices and that’s where the EMI adding machine comes in the image.

#### All you need to know about EMI Calculator

Consider a circumstance where you’ve concluded that you’re going to take an advance, whether it’s an individual, an auto or a home credit. The initial step in taking the advance is not holding a candle to the current situation for it, but rather taking a seat and figuring out how much it will cost you. This expense is calculated as far as the regularly scheduled installments to be paid to the credit are referred to as EMIs or Equated Monthly Installments.

#### Calculation behind EMI calculator

To calculate the personal loan EMI the following formula is used:

EMI = [P x R x (1+R)^N]/[(1+R)^N-1],

In this formula, the letter stands for:

EMI is the equated monthly installment

P shall be the principal or amount borrowed as a loan.

R is the interest rate charged to the loan amount (the rate of interest should be a monthly rate)

N is the term of payment or the number of monthly payments you pay (tenure should be in months)

This is the same formula used by an EMI calculator to deliver the correct EMI payable in seconds.

#### 1. Can I use the same calculator for home and car loans?

Usually, the EMI calculator for home loan, the EMI calculator for car loan and the EMI calculator for personal loan work on the same three parameters. These parameters include the amount of the loan, loan tenure and rate of interest. The main difference between the calculators is the maximum capital allowable as an input, which leads to select an EMI calculator based on the type of loan.

#### 2. Do EMI calculators give better results than excel sheets?

Accurate results can be obtained both from excel sheets and from the online EMI calculator. The only big difference is that online computers save you from the complications of long and tedious calculations and tabulate the EMI in seconds. If you use an excel sheet calculator, you may need to put more time and effort into it. That is why online calculators have become the favorite choice.

#### 3. Is the EMI calculation identical to the actual EMI from bank?

EMI is calculated on the basis of your inputs by the EMI calculator tool. When it comes to Bank EMI, the loan amount, loan tenure, interest rate and processing fees for the loan could be slightly modified. In the event that the bank does not approve the correct tenure loan amount and the interest rate you are using for input, the EMI you are paying may differ slightly from the EMI calculated by the EMI calculator tool.

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### Equated Monthly Installments (EMI)

If you get a secured loan (home credit or car loan) or an unsecured loan (persons loan) you are required to pay the loan back over a specified period called the loan tenure through Equated Monthly Installments (EMIs).

Your loan costs are calculated by monthly payments. The calculation of the loan EMI can help you determine your loan’s monthly cost. Therefore, a monthly budget can be created to balance income and expenses. To ensure that the payment of your EMI loan is within your reimbursement capacity, either you can adjust your loan tenure, loan amount or both.

The interest rate and processing fee charged by a bank cannot be adjusted. You are nevertheless able to compare different loan offers and choose a lower interest rate and a zero fee to reduce the cost of your loan. Here are some important reasons why your EMI loan should be pre-calculated:

Loan amount: just borrow as much as you can reimburse. Depending on the calculation of the EMI loan, you can select a suitable amount for your financial needs. Keep the debt-to-income ratio low to avoid your loan defaults.

Lending tenure: Short lending means higher EMI payments and reduced interest payments, while long lending means lower EMI payments, but higher interest payments. Using the on-line EMI calculator, calculate EMIs for different loan tenures. To avoid a higher interest payment, select the appropriate loan tenure.

EMI on loan: A high debt-to-income borrower is more likely to be defaulting on a loan. If you default on a secured loan, the bank will repossess and auction your car, to reimburse the outstanding duties. Therefore, your EMI loan payments should not exceed 50% of your income.

The calculation of manual loans EMI can be cumbersome and susceptible to human error. With the advent of technology, calculating EMI loans online is easier with just a few clicks. Use the free online EMI calculator on a trustworthy third-party website or on a bank website for immediate and accurate results. The cost of any loan system you choose can be calculated using online EMI calculators.

## Calculator for Personal Loans calculates the monthly interest rate

The first thing that comes into your mind when you are considering taking a loan is the rate at which you charge interest and how you can calculate the EMI for personal loans. Every financial institution collects interest at a different rate, and the interest rate offered is an annual rate. You must first convert that annual rate into a monthly rate in order to calculate your monthly EMI. The EMI personal loan calculator automated the steps involved.

To convert the annual rate into a monthly rate, you must divide the annual interest rate by 12, i.e., if the interest is charged at 20 per cent per annum, then you must divide the rate between 20 and 12, which results in 1.66. This means that the monthly interest rate on your loan is 1.66 percent per month. You can use the interest rate calculator to calculate the interest rate per month.

## Benefits of the EMI calculator:

The main advantage of a borrowers ‘ EMI calculator is that they know how much money they have to pay to their credit every month to avoid ending in financial stress and financial distress. The EMI Loan calculator helps the borrower choose an EMI that can comfortably be reimbursed over the loan tenure. The advantages of this calculator are not limited to the above.

Anytime Access: The calculator can be accessed anytime and anywhere. You can use the calculator for your convenience any number of times. You do not have to visit the bank branch or participate in complex mathematical calculations; instead, you can only access the internet and use the EMI computer.

Accurate results: Calculations by hand run the risk of error. In addition, the same calculations can lead to more errors and further wrong results again and again. If you calculate EMIs individually for loans offered by various banks, the chance of errors increases further. The online EMI calculator can help you calculate error-free by clicking a button.

Saves your time from consuming and complex calculations: Comparing loans from various banks is time-consuming & boring since, you always use the same formula. You need to spend long hours calculating EMIs for a loan with pen and paper. However, this online tool saves you time and completes all the long and boring calculations in seconds. So you can try out as many combinations of amount, tenure and interest rates from the comfort of your home.

Aid to the financial planning process: When calculating the EMI for a loan, you know the amount you will have to pay for a particular loan, tenure and rate. This helps you to plan your finances before you take the loan so your monthly budget is not hit. You can also change the loan parameters to the most appropriate EMI according to your needs.

Each loan can be calculated with an online EMI calculator: EMI loan calculations have never been so easy! For every type of loan, be it home, car or education, you can use a different calculator. Although the parameters for each loan are essentially the same, there may be cases in which you feel that you must use EMI calculators for specific loans. This means that any EMI loan calculator is suitable for a specific loan and should be used only for the particular loan.

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