EMI calculator is a convenient tool which uses mathematical formula to calculate the monthly amount payable to the lender. EMI = [P x R x (1+R)^N]/[(1+R)^N-1] where, P, R, and N are the variables, and therefore, the EMI amount will change with the change in the variables.‘R’ denotes 'Rate of Interest.' This is the interest rate at which the bank lent you the principal amount as loan. The interest rate varies from bank-to-bank and loan- to-loan, as there are many types of loans. So, cross-check the rate of interest before you apply for the loan, another bank may offer you loan at lower rate of Interest. ‘N’ denotes the time period for which the loan has been taken, known as Tenure. As the loan amount is paid back in monthly installments, the tenure is calculated in months and not years. Therefore, if talking about 2 years, that means, a tenure of 24 months, and so on.
EMI or Equated Monthly Installment is a fixed payment made by the borrower to the lender. The amount paid each month consists of principal amount and interest amount, and the loan gets repaid within specific period of time. Now, EMI calculator is an calculating tool which helps you to calculate what amount is need to be paid each month and up to how much period of time. The simplest way to figure out your monthly payments and balance your budget is to use an EMI calculator. EMI Calculators have many uses even if you want to calculate EMI of your car’s loan, home loan , bike loan, or a personal loan, etc.
Ms. Kritika Yadav is a Certified Financial Planner, an entrepreneur, an investment enthusiast and an Educationist. She is also the founder of Market Maestroo Pvt.Ltd.
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