WHAT IS EMI?
The term EMI (Equated Monthly Installment) refers to a financial term used in loan repayments. It is a quick and simple way to pay off any type of loan. When a borrower obtains a loan from a bank or an NBFC, the loan is primarily repaid in monthly installments. EMIs are the abbreviation for these fixed financial installments. The amount of the EMI is determined by the principal loan amount, the loan term, and the interest rate.
Is the EMI amount variable or constant throughout the loan term?
The borrower’s choices when choosing and paying for a particular EMI plan decide the changing EMI number.
Prepaying the Loan Amount: If the borrower pays off the loan before the end of the term, the EMI amount changes. Prepaying the loan reduces the principal amount owed, and the interest rate changes based on the amount of principal still owed. In this case, too, the borrower has the option of asking the lender to change the loan’s tenure rather than the Equally Monthly Investment amount.
Choosing Progressive EMIs: Many borrowers choose this option because they are unable to pay the EMI amount in large lump sums. Many lenders offer to repay the loan in smaller EMIs at the start of the repayment period. This is for a set time.
Floating Interest Rate: If the borrower chooses a floating interest rate, the amount of the EMI will change each time the lender sets a new floating rate. However, the borrower has the option of asking the lender to change the loan’s tenure rather than the EMI amount.
How EMI can be calculated?
For calculating EMI, we need to know about 3 terms- The principal Loan Amount, The Rate of Interest and The Tenure.
The principal loan amount is the amount of money that the borrower will receive as a loan from the bank. This is the primary criterion for determining the EMI. As the principal amount grows so does the EMI.
The interest rate that will be paid on the borrowed sum or principal amount is determined by the lender. The borrower’s income, credit history, repayment capability, and other factors all influence the interest rate.
Tenure refers to the time frame over which the borrower is expected to repay the loan with interest. The loan tenure varies depending on the loan type, the borrower’s credit history, and other eligibility factors.
Types of EMI Calculator
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Home Loan EMI Calculator
The home loan Equally Monthly Investment calculator is used to compute the EMIs you pay on a home loan. While purchasing a home is a significant financial and personal decision, obtaining a home loan necessitates extensive planning and research, particularly given the loan’s long tenure and high loan principal amount.
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Car Loan EMI Calculator
The car loan Equally Monthly Investment calculator calculates your EMIs based on the loan amount, tenure, and interest rate. Lenders provide various schemes for purchasing new and used cars. Purchasing your dream car necessitates a significant investment, which can be met with a car loan. Bear in mind, however, that the amount lent for a car loan must be repaid-with interest over a period of up to 5 years.. If you are unable to repay the amount owed, the lender may repossess your vehicle and sell it at auction to recover the outstanding balance.
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Personal Loan EMI Calculator
Personal loans are “all-purpose loans,” which means you can use them for anything, such as funding travel or medical expenses. Because it is an unsecured loan, the interest rate is higher and the repayment period is shorter. The personal loan Equally Monthly Investment calculator is an excellent tool for assessing your repayment capabilities and determining a loan amount that you are comfortable paying back.
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Education Loan EMI Calculator
The cost of education has risen dramatically, making it difficult for parents to provide a good education for their children. With repayments, an education loan covers the cost of a student’s education both within the country and abroad. With the help of an Education loan Equally Monthly Investment calculator, you can calculate how much you will have to pay each month to repay the loan plus interest.
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Property Loan EMI Calculator
A secured loan can be obtained against any property you own (residential, commercial, or land) that must be mortgaged with the lender. Use an Equally Monthly Investment calculator for LAP to calculate the EMI for the loan so that you do not exceed your repayment capacity and end up financially straining yourself.’
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Benefits of using EMI Calculator
The main advantage of using an Equally Monthly Investment calculator for borrowers is that they can determine how much money they will need to pay toward their loan each month so that they do not end up financially straining themselves and ending up in financial distress. The loan Equally Monthly Investment calculator assists the borrower in determining an EMI amount that can be comfortably repaid over the loan’s term. The advantages of this calculator are not limited to the above-mentioned point. There are additional advantages to it, which are as follows:
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Access at any time
The calculator is available at all times and from any location. You are free to use the calculator as many times as you like. You are not required to visit a bank branch or perform complex mathematical calculations.
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Exact Results
Calculating by hand carries the risk of making mistakes. Furthermore, repeating the same calculations can lead to more errors and erroneous results. When you calculate EMIs on loans offered by different banks individually, the possibility of error increases. The online EMI calculator allows you to perform error-free calculations with the click of a button.
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Time Saving
Comparing the loans offered by different banks can become tedious and time-consuming if you use the same formula over and over. To calculate EMIs for a loan with pen and paper, you will need to spend many hours. However, by using this online tool, you can save time and complete all of the tedious and time-consuming tasks.
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Assists in Financial Planning
When you calculate the Equally Monthly Investment for a loan, you know how much you will have to pay when you borrow a loan of a certain amount, tenure, and interest rate. This enables you to plan your finances prior to taking out the loan, ensuring that your monthly budget is not jeopardized. You can also change the loan parameters to find the best EMI for your needs.
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For each loan, you can use an online EMI calculator.
Loan EMI calculations have never been easier! You can use a different calculator for each type of loans, such as a home loan, a car loan, or an education loan. Although the parameters for each loan are essentially the same, there may be times when you feel compelled to use loan-specific EMI calculators. This means that any loan EMI calculator will work for you.
So the Bottom line is- Is EMI a good way to repay a loan?
To pay off any debt, an EMI is the best option. It is simple, painless, and does not interfere with the borrower’s financial plan. Repaying loans has never been easier, thanks to the fact that many banks now offer flexible EMI terms.
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