3 Min Read
To manage your finances efficiently, you must stay aware of your monthly commitments and investment growth. Usually when people plan to take a loan, one of their major concerns is understanding the total amount they will repay and the number of Equated Monthly Instalments or EMI. With the help of a loan calculator or other similar tools, it has now become an easy task.
Besides simplifying your financial planning, they allow you to make informedbudget decisions without the need for manual calculations.
What is EMI?
The equated monthly instalment (EMI) is the amount a person pays a bank or any other financial institution every month until the loan is paid.
It consists of a part of the principal amount an individual has to repay along with the interest on the total loan taken.
In simple terms, the EMI is a part of the equally divided monthly amount that people are required to repay the bank to clear an outstanding loan within a stipulated time period.
How to calculate EMI?
The total EMI to be paid depends on various factors, including the principal borrowed sum, total tenure of the loan period, rate of interest as well as the monthly or annual resting period. To calculate the same, you will have to take the total sum of the principal amount and interest and divide it by the tenure of the loan period.
Before calculating it, keep in mind that the interest component of the EMI usually remains high in the initial months of the loan period and gradually comes down with each payment. This means the highest interest component and the lowest principal component will be there in the first EMI.
As you move on with regular payments, the interest component keeps reducing, while the principal component continues to rise with time.
But the major question here is how to do calculation for such complex numbers? Well, for this most of the online loan calculators use a simple formula -- EMI = P X r X (1 + r)^n / ((1 + r)^n - 1).
For more insights and to access various investment calculators, visit CNBC TV18 Investment Calculators.
In this, P is the principal amount, R is the rate of interest and N stands for the loan tenure.
EMI Calculator: Benefits
This key financial tool helps borrowers to estimate the monthly instalments they have to pay throughout the loan period.
Taking into consideration the total loan amount, interest rate and time duration, an EMI calculator effectively provides a comprehensive understanding of the monthly financial commitments to help people in financial planning and administration.
It must be noted that several private and public sector banks and other institutions provide their own EMI calculator facility to the customers.
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Besides simplifying your financial planning, they allow you to make informedbudget decisions without the need for manual calculations.
What is EMI?
The equated monthly instalment (EMI) is the amount a person pays a bank or any other financial institution every month until the loan is paid.
It consists of a part of the principal amount an individual has to repay along with the interest on the total loan taken.
In simple terms, the EMI is a part of the equally divided monthly amount that people are required to repay the bank to clear an outstanding loan within a stipulated time period.
How to calculate EMI?
The total EMI to be paid depends on various factors, including the principal borrowed sum, total tenure of the loan period, rate of interest as well as the monthly or annual resting period. To calculate the same, you will have to take the total sum of the principal amount and interest and divide it by the tenure of the loan period.
Before calculating it, keep in mind that the interest component of the EMI usually remains high in the initial months of the loan period and gradually comes down with each payment. This means the highest interest component and the lowest principal component will be there in the first EMI.
As you move on with regular payments, the interest component keeps reducing, while the principal component continues to rise with time.
But the major question here is how to do calculation for such complex numbers? Well, for this most of the online loan calculators use a simple formula -- EMI = P X r X (1 + r)^n / ((1 + r)^n - 1).
For more insights and to access various investment calculators, visit CNBC TV18 Investment Calculators.
In this, P is the principal amount, R is the rate of interest and N stands for the loan tenure.
EMI Calculator: Benefits
This key financial tool helps borrowers to estimate the monthly instalments they have to pay throughout the loan period.
Taking into consideration the total loan amount, interest rate and time duration, an EMI calculator effectively provides a comprehensive understanding of the monthly financial commitments to help people in financial planning and administration.
It must be noted that several private and public sector banks and other institutions provide their own EMI calculator facility to the customers.
(Edited by : Anshul)
First Published: Dec 12, 2024 2:48 PM IST
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