New Delhi: If you’re thinking about taking on a loan, you should make sure you can handle the load and make monthly payments on time, and you can do that with the help of an EMI calculator.
Anyone can see how much money they would need to spend each day by using an EMI calculator, which can help them decide if they can afford it or not.
What is an EMI Calculator?
An EMI calculator is an online tool that estimates the amount you have to make in monthly payments. Before taking a loan, borrowers can use this tool to get an estimate of how much money they would be required to pay regularly.
An EMI calculator uses multiple factors to determine the monthly payment. You can use this loan for all types of loans and plan out your expenses. The motive behind this tool is to help borrowers understand the weight of the loan they have taken. Using an EMI calculator, anyone can see how much money they would have to spend daily, and this can help them determine if they can afford it or not.
How to Use an EMI Calculator?
An EMI calculator is relatively easy to use, and the best part about it is that it is free. With the calculator always a few clicks away, let's discuss how to use one.
1. Access the EMI calculator.
2. Enter your loan amount, interest rate, and loan tenure.
3. Click on the calculate button and wait.
After this, the EMI calculator will show you the amount you have to pay as your monthly payment. Seeing the process, you must have realized how easy it is to know your monthly payment amount. Now, all that's left is to enter your details and see the magic. Next, we have mentioned some details that will help you understand how EMI calculation works.
Factors That Affect EMI Calculation
The amount you’re seeing as your monthly payment is not some random number an AI has generated; instead, it is the result of a highly advanced process. EMI calculation is dependent upon several factors, and these are:
Loan Amount
It should be evident that the total amount you’re borrowing will influence the amount you’ll be paying back. Higher total loan amounts will result in higher EMIs.
Tenure of Loan
The length of time the borrower agrees to repay the loan balance is referred to as the loan tenure. The tenure length has a direct impact on the amount of the monthly installment (EMI), so loans with shorter tenure will have higher EMI amounts, and vice versa.
Interest Rate
The interest rate refers to the percentage of the loan amount that the lender charges as interest. Higher interest rates add to the loan amount and raise the amount the borrower has to pay. High interest rates mean high EMIs, and vice versa.
How an EMI Calculator Helps You Manage Your Loans
Now that we have correctly explored what EMI calculators are and how they work, we should also reveal how they can help you manage your loans better. The points mentioned below will help you see how an EMI calculator can help you.
Estimate Monthly Payment Amount
The primary job of an EMI calculator is to estimate the monthly payment amount. Knowing this firsthand, any borrower can check affordability and see if they can successfully complete the loan tenure.
Set Budget
Knowing how much they have to pay monthly, the borrower can set their budget and prepare for the tenure. By setting their budget, the borrower will be well-prepared for the time ahead. When done correctly, this can make the whole process a lot easier and smoother.
Compare Money Lenders
Another great benefit of EMI calculators is that borrowers can use them to compare different moneylenders and check which one is the best. Through EMI amount comparison, customers can select the best lender for their needs. With all the benefits from an EMI calculator to manage your loan, it is advisable enough to keep your income in check for filing taxes completely. For people with much confusion on their tax slab or how much their tax can be, a tax calculator can come handy to solve the calculations for you.
H2 Using ACKO to Manage Loan Calculations
Now that you're prepared to take out a loan, use the EMI calculator appropriately. The EMI amount can be significantly changed by entering incorrect information. As we come to an end, we advise you to use the EMI calculator provided by ACKO. The best experts in the field developed the tool with the goal of making it ideal for borrowers.
Disclaimer: This is a syndicated feed. The article is not edited by the FPJ editorial team.
