Taking a loan is now a commonplace practice as it helps to fulfil life’s important goals. Whether a loan is taken for the purchase of a home or a car, several reputed banks offer attractive loan offerings for all people. An aspect that is closely associated with any kind of loan is the Equated Monthly Instalment (EMI), which denotes the monthly sum payable on the loan taken. Given below is an overview of EMI and its association with loans.
The payments concerning this monthly deduction are made towards both the interest and the principal.In the early stages, the interest amount makes up a big chunk of the EMI spending. But as time progresses, the interest component sees a reduction with the principal segment witnessing an increase. There are three essential factors upon which an EMI depends:
The loan amount, which refers to the total amount borrowed by an individualThe interest rate, which is levied on the amount that is borrowedThe loan repayment tenure between the lender and the borrower
What is the purpose of an EMI calculator?
To help borrowers understand the amount he needs to pay on his loan, a special type of calculator called an EMI calculator has been made available in abundance. This form of loan calculator has been particularly designed to aid in the computation of EMIs for diverse types of loans.With this piece of helpful tool, a borrower is able to get a clear picture on how to go about making his monthly repayment. It allows him to sufficiently plan beforehandso that the repayment process is smooth and convenient. As a result, he faces lesser chances of defaulting on his payment.Above all, one must clearly understand that an Equated Monthly Instalment on a loan amount does not undergo any changes; it is only the interest percentage and the principal sum, which see significant changes from time to time.
EMI calculators and its varied forms
To meet the needs and specifications of different types of loans, the EMI calculator comes in varied forms. Although the various EMI calculators share the same basic formula, they do feature certain unique traits pertaining to the myriad types of loans available for borrowers. Given below are some of the different forms of EMI calculators that are available in the market are:
EMI calculator for carsEMI calculator for homesEMI calculator for personal loans
Whether you are looking for EMI calculators for your car or your home, all EMI calculators take into account the principal sum borrowed, outstanding balances prior to and subsequent to every EMI payment as well as the loan tenure.