A loan or EMI calculator is an online tool for free. There are many calculators that even have the feature to show the graphical representation of the payment. You can even find specially designed calculators by the banks. So, it depends on you which one you want to use. The result and functioning are similar in all of them.
Just in case you are thinking of not using the calculator because it might look a little consuming, here is the surprise. It hardly takes minutes for the calculator to give results and that too with full accuracy. So, read more to know what are other benefits, functioning, and formula of a loan EMI calculator.
How does a home loan calculator work?
A home loan EMI calculator is the tool used to calculate the monthly installments. The advantage of using a calculator is that you get accurate results instantly. Other than the accuracy, you get the advantage of knowing in advance, not only the EMIs or the equated monthly installments but also the total interest outgo and the total amount (principal+interest). This tool takes into account the following details:
- Loan amount
- Interest rate
On the basis of the above data, this calculation tool shows the EMI, Total Interest Outgo, and Total Amount. For instance, if you are taking a home loan with the below details:
Loan amount- ₹20 lakhs
Interest rate- 8.50% p.a.
Tenure- 20 years
The payment details will be as follows:
Monthly EMI- ₹17,356
Total Interest Outgo- ₹21,65,552
Total Amount (Interest + Principal)- ₹41,65,552
How many times can you use this tool?
Infinite. The answer is that yes you can use this calculator as many times as you want till the time you are with the end result. The main purpose of using a calculator is when you want to decide the lender for your loan. Also, sometimes people want to keep a track of their remaining payment so that they can prepare accordingly. Thus, it is both a comparison tool and a guidance principle in the loan.
Which formula does it use?
The calculation in the EMI calculator is done through the below-given formula:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
EMI = Equated Monthly Installment
P = Principal Loan Amount
R = Monthly Interest Rate
N = Number of Monthly Installments
What are the benefits of using a loan calculator?
Below are the reasons you should look for using a loan EMI calculator:
- The calculation of EMI is simpler with the calculator
- It shows result instantly
- You can use it as many times as you want
- It is available online so there is flexibility
- It helps in comparing different combinations
- It gives accurate results and is not partial
With the above information, we hope that you will also use a home loan calculator before you finalize your loan. Doing so will help you make the right move and also know where you stand in terms of repayment capacity.