# EMI Calculator: Decoding Debt and Making Informed Decisions

In India, the borrowing rate among individuals has increased rapidly. Nowadays, people avail various types of loans including home loans, personal loans, education loans and more. These loans are repaid via Equated Monthly Instalments (EMIs) Failing to pay back EMIs on time results in penalties and a reduction in credit scores.

In this scenario, a loan applicant needs to make a proper financial plan using an EMI calculator. Proper use of the calculator will let you calculate your EMIs accurately and make financial decisions. Continue reading this blog to gain knowledge of loan management and how to use the calculator.

## What Is an Equated Monthly Instalment (EMI)?

EMIs are fixed monthly instalments a borrower pays to lenders towards the loan amount over the course of the loan’s tenure. In each EMI, there is an interest and principal portion, which continues to change with each instalment. This way, it becomes possible to repay the loan amount comfortably over the loan tenure.

At the very beginning, the interest amount constitutes a large portion of each EMI. However, later on, as the loan tenure progresses, the principal amount constitutes a larger portion of each EMI payment. You can check the details of principal and interest components in the loan amortisation schedule.

## What Is an EMI Calculator?

An EMI calculator is a handy tool that allows individuals to calculate the instalment amount needed to pay every month. Most importantly, the calculator simplifies EMI calculation manually. This calculator can be used for calculating EMI amounts on different kinds of loans including home loans, car loans, personal loans, bike loans, and others. This will provide you with an overview of monthly repayment towards your loan amount.

This calculator considers a variety of factors to calculate the EMI amount. The factors include number of months, amount of loan, and interest rate. Once you enter all the necessary details, the EMI calculator will provide you with a complete detailed EMI amount you need to pay out each month to repay the loan amount within your chosen tenure.

## How Does the EMI Calculator Work?

Being an online tool, it helps to calculate the amount payable to your lender from the loan principal, interest rate and tenure. It uses the following mathematical formula:

EMI = [P*R*(1+R)^N] / [(1+R)^N-1]

Where the variables are P, R, and N. This means that each time you change these variables, your EMI amount will also change.

P stands for principal amount. This is the amount that banks and NBFCs grant you based on various factors. The amount of loan however depends on your credit score, income, value of collateral (for secured loans), tenure and other factors. If your loan amount is high, your EMI amount will also be higher.

R stands for the rate of interest. This is the yearly interest rate charged on the loan amount. It varies from one bank to another and also on the type of loan taken. Thus, before you decide to opt for a loan, make sure to conduct a thorough comparison of the interest rates banks provide.

Lastly, N denotes the years for which you have taken a loan. This is also known as loan tenure. It is the total period allotted for loan repayment. Since you need to repay the loan amount monthly, calculate the tenure in months instead of years.

## How to Use the Samco EMI Calculator?

Samco's EMI Calculator is simple and easy to use. It will provide you with an estimation of your monthly payments on the basis of interest rate, tenure and loan amount. To use the calculator with ease, you need to enter the principal amount, the rate of interest and tenure. This will provide you with the EMI amount you need to pay monthly.

You can adjust all these parameters to notice the impact on your EMI amount and payable interest. With this online tool, you can now plan your loan repayment in advance.

Here is a detailed step-by-step guide on how you can use Samco’s calculator:

Step 1: Open the Samco Trading App and enter the loan amount you want to borrow.

Step 2: In this step, enter the rate of interest offered by the lender.

Step 3: Enter the tenure of your loan in months or years.

Step 4: Choose the option of whether you want your EMIs to pay out in advance.

Step 5: Click 'Calculate' and you will get detailed information on total interest, total payment, and EMI amount on the calculator.

Moreover, you can also check out the amortisation schedule to see the break-up of the EMI amount including the principal and interest along with the outstanding balance after payment of EMIs each month.

## What Is the Loan Amortisation Schedule?

The amortisation schedule provides a detailed table outlining all loan payments each borrower needs to pay until the end of the loan term. The loan amount portrays a breakdown of both principal amount and interest. In an amortisation schedule, the percentage of interest goes on decreasing with every payment. However, the principal amount increases.

Thus, at the beginning of every schedule, the majority of loan payment is paid in interest while later on, the payment includes the loan’s principal amount. Thus, an amortisation schedule helps borrowers understand how monthly payout reduces their loan balance and the interest portion they end up paying over time.

## What Are the Different Types of EMI Calculators?

There are various types of loan calculators depending on the loan type. Mentioned below are the calculators:

• ### Car Loan EMI Calculator

There are different car loan schemes made available in the market. Hence, make sure to choose your preferred scheme and calculate the loan amount using this calculator, before you opt for purchasing your dream car. Keep in mind that if you fail to repay the full loan amount on time, the bank will repossess your car and sell it to recover their dues.

• ### Home Loan EMI Calculator

Home loans are one of the most common loans that people opt for. This type of loan usually comes with a long tenure and a significant principal amount. Hence, before opting for a home loan, make sure to perform all calculations using the home loan calculator or EMI. This way, you will come to know the EMI amount you need to pay and plan your finances accordingly.

• ### Education Loan EMI Calculator

Each year, the costs of education keep on rising. In this scenario, if you are planning to send your child abroad for higher education, you might need an education loan. Generally, education loans come with a long repayment period for which you can repay the loan amount once your child's education is complete. To compare education loans, you can use the loan calculator and enter the terms offered by different lenders.

• ### Loan Against Property EMI Calculator

A loan against property is a secured loan. To opt for a loan against property, you can keep any of your commercial or residential property as collateral. To find out if you can afford such a loan, you can use a Loan Against Property calculator provided by lenders.

• ### Personal Loan EMI Calculator

Whether you are planning for a vacation or repairing your house, you can opt for a personal loan as it comes with no usage restrictions. Personal loans have become quite common these days. The banks can help you estimate the loan details and EMI amount to pay out each month. However, for your convenience, use this calculator.

## What Are the Benefits of Using EMI Calculators?

This calculator, being a handy tool, makes the whole process of planning and selecting a loan much easier. Here are some of the benefits:

• ### Financial Planning

With the proper use of an online calculator for any loan, you can plan your budget accordingly. Planning your finances will also prevent you from any financial stress.

• ### Flexibility

These calculators are easy to use and you can also experiment with various loan parameters. You can adjust the rate of interest, loan tenure, and loan amount to determine the effect on your monthly EMIs. This kind of flexibility makes it easy to compare loan terms and their effects.

• ### Estimation of Costs

The use of calculator provides detailed insights into the rate of interest you need to pay over the entire loan tenure. This way it becomes possible to examine the costs of borrowing. A proper understanding of interest rates and tenures will let you make better financial decisions in the long run.

## What Are the Factors Affecting EMI?

The EMI amount depends on several factors including tenure, principal amount, and the rate of interest. Causing a change in any of these variables will lead to a change in your EMI amount. Here is a detailed description of the factors affecting loan EMIs:

• ### Change in Tenure

The loan tenure differs from one bank to another. If you change your existing lender and shift the loan amount accordingly, the loan tenure will change. This thereby affects the EMI amount. If the loan tenure increases, the EMI amount will decrease and vice versa. However, the longer the loan tenure, the more you will pay out as your interest compounds over time.

• Change in Interest Rates

The interest rate banks offer can be fixed, hybrid, or floating. For a fixed interest rate, the rate stays the same over the period. On the other hand, a floating interest rate has a close link with a base rate like the Marginal Cost of Funds Based Lending Rate (MCLR). It keeps on changing several times over the loan tenure. Lastly, a hybrid interest rate holds a fixed rate of interest for a specific period. Then, the EMI amount changes with changes in the rate of interest.

• Loan Prepayment

Prepaying your loan amount will lead to the deduction of your total outstanding amount. This thereby reduces the loan tenure. If there occurs no change in loan tenure, the EMI amount might decrease. Making regular prepayments lowers your debt burden and interest paid to your lender.

## Final Words

Before opting for any loan, use the EMI calculator from the Samco Trading app. This will enable you to repay the loan instalments comfortably and ensure you have enough cash for your own needs. Overall, this important financial tool will help in well management of your finances. Using it, borrowers can reach an informed financial decision and make loan repayments on time.

While using this calculator, make sure to input all necessary details to obtain accurate results. Going through the factors that affect EMI, borrowers can make informed decisions and manage their finances effectively.

#### 1. Is it possible to change the EMI amount during the loan tenure?

Ans. No, EMI is a fixed amount. During the loan tenure, you cannot make any changes in the EMI amount. You can however choose loan prepayments to lower your loan tenure.

#### 2. Can I use an EMI calculator for all loan types?

Ans. Yes, you can use an EMI calculator for all kinds of loans including car loans, personal loans, home loans, education loans, loans against property, and other types.

#### 3. What is the impact of interest rate on the EMI amount and the overall cost of a loan?

Ans. If the rate of interest of a loan is higher, your EMI amount and the overall cost of the loan will also be higher. Even a small increase in the interest rate will lead to much higher overall costs over a long time.

#### 4. Is it mandatory to pay EMIs on time?

Ans. Yes, you must pay your EMIs on time without fail. This will bring about improvements in creditworthiness and will also raise your credit score. Payment of EMIs on time will help borrowers avoid penalties, plan expenses and maintain financial stability.

#### 5. What are the consequences of failing to pay EMIs on time?

Ans. If you fail to pay EMIs on time, the loan tenure will increase and your lender might impose late fees. This will also reflect on your credit score and creditworthiness.

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