The Principle To Figure & Benefits of An EMI Calculator

The Principle to Figure & Benefits of an EMI Calculator

When it comes to a business loan, it is a tool that strengthens a business’ financial foundation. To implement a plan for the future, you must obtain a solid financial base. And, based upon your needs and the eligibility criteria the loan amount will be fixed by a financial institution. The tenure period depends upon the repayment the borrower should obey.

When it comes to the repayment plan, it comprises a monthly instalment that is paid by the borrower until the tenure ends. For the betterment of planning, the lending companies have EMI calculators that help a borrower find the EMI he has to pay against a loan amount disbursed by the lending company.

What Is A Business Loan EMI?

There are other ways through which you can make payments for your business loans. EMI is the simplest way. By utilising this payment method, your loan amount will become further divided into equal and fixed amounts for every month of your loan amount is remunerated.

An EMI contains two sections: The repayment option is the best chosen for all the small businesses with which you can purchase expensive machines, equipment, inventory if you don’t obtain sufficient funds to pay it in one go.

There is also a financial agreement that is made between the borrower and the lender. A sum of money must be paid monthly. It will be calculated along with the rate of interest on the principle that is set by the financial institution.

With the help of EMI payment solutions, it has created an excellent tool for the borrowers to avail a lump sum of money and pays it conveniently over a stipulated amount of time. With the help of online, you will be able to calculate the EMI calculator formula. However, the principle remains the same everywhere.

How Can You Utilise An  EMI Calculator For A Business Loan?

With the help of a small business loan calculator, it lets you calculate your monthly EMIs on your business loan. When you are utilising the EMI calculator it will enable you to figure out how much EMI do you require to pay monthly until a stipulated time to repay your loan. However, you will also be able to plan how much money you require for EMI monthly.

The loan repayment scheme is mutually settled by the borrower and lender when it comes to the loan repayment scheme. It is an agreement formally signed by both two parties. When your loan amount will be disbursed borrower will be obligated to make the payment monthly including the interest rate.

With the help of the EMI calculator for a business loan, the borrower can now easily find out how much amount needs to be paid every month, considering the amount you want to borrow and the interest on that amount.

The EMI calculator can easily be adjusted depending on the borrower’s convenience to figure the feasible plan to make repayment of the loan amount on time. And, there is no need to go down to a lender’s office anymore and discuss the interest rates, loan amount, EMI, and tenure. However,  you can easily find out what you want and how to comply with it.

This calculator is based on the conditions followed by the lender. All borrowers have to enter specific variables in every section of the calculator to find an EMI plan instantly. It also helps a lender learn more and plan the future accordingly by considering the data provided by the business loan EMI calculator.

How Can You Be Able To Calculate EMI With A Business Loan EMI Calculator?

With the help of a business loan EMI calculator, it is easy. All you need to choose is the loan amount, tenor and rate of interest and do. It will do all of the calculations and display the EMI amount you have to repay monthly. The formula regarding the EMI calculation is extremely simple to understand.

Loan EMI Calculator Formula: It is a mathematical formula that is considered and is utilised by the financial institution that will help you to calculate EMI on the loan amount, interest rate and the tenure period. It will provide you with an adjustable place where you can insert the variables in the particular sections and calculate an EMI.

Below is the loan EMI calculation formula with an example:

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

EMI = Equated Monthly Instalment

P denotes the amount of principal you will borrow from the lending institution.

R stands for the interest rate an institution considers for a business loan. It ranges especially on the loan amount you require to keep it safe from the lender. It will also be calculated monthly to help an EMI sum depending on the variables produced by the user into the calculator.

N denotes the loan term or tenures the borrower will pay the amount.

Let us now consider an example to find out the EMI a person has to pay if you borrow INR 2 Lakh for the tenure of 2 years. Then, the rate of interest is 20% per annum. The first step is to convert the annual interest rate into a monthly one to find out the EMI level. However, if we divide 20% by 12 months, then we get:

20%/12 = 1.66%

Another method is just you must convert the tenure period into months before you calculate EMI. For instance, a tenure period of 2 years will be transformed into 24 months. It is pretty simple. All you must do is interpret the values in the variable positions.

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

Here, P = INR 200,000

R = 1.66%

N = 24 months

The formula becomes:

EMI= [2,00,000 x 1.66/100 x (1+1.66/100) ^ 24 / [ (1+1.66/100) ^ 24 – 1 ]

The EMI is then calculated to be INR 10,179. This formula is universal, determined, and used in all financial institutions worldwide. However, the fundamental variables change as per the requirement of a user and the considerations of a lender.

Pros of Business Loan EMI Calculator:

Become aware of the loan: The easiest financial terminology is unclear to all the borrowers. A simple explanation of the terms is to calculate monthly instalments which will make it even more simple for all the borrowers to become aware of the monetary benefits steadily.

Time-saving: It will help you to deliver time and your resources. And, by using an EMI calculator you will not have to see a lender anymore. You can easily choose the loan amount you require to be borrowed and the monthly issues to comply along. However, you can also enter a few values in the calculator and receive results in seconds.

It will be helpful to enable you to a proper estimation of your EMI loan amount and you can easily plan your finances accordingly. You must also ensure that your debt-to-income ratio is under 50% to maximise your chances of approval of a loan. It will eliminate the opportunity of a miscalculation and provide you with an estimate every time.

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