What is an EMI Calculator? 5 Benefits of Using One

Everyone takes a loan at some point for funding their child's education, wedding, medical emergency, and so on. It has become an essential financial tool today.

The critical components of the loan are tenure, interest rates, and amount. When you take a loan, it is a financial agreement between the lender and borrower. The lender gives a specific amount to the borrower to fulfill their needs. The borrower then repays the lent amount in the form of EMIs within the particular term.

This is where an EMI calculator enters.

What is an EMI calculator?

It is the payment that the borrower makes every month towards loan repayment. The EMI is a combination of interest rates and principal amount. You can use the loan EMI calculator to decide your monthly EMIs.You have to provide inputs such as interest rates, amount, and duration. You later receive instant and accurate results. Using online EMI calculator is ideal as it is hassle-free and convenient. EMIs are beneficial as you repay in parts, thereby reducing the financial burden.

How does an EMI calculator work?

Every lender has the instrument available on their portal.You have to input certain variables for determining the EMI:

• Loan amount: It is the money that you borrow from the lender for purchasing a house, car, bike, and funding education
• Loan duration: It is the total time to repay the credit. The term differs depending on the type of loan, the amount, and also the lender.For instance, personal loan tenures are shorter than home loans
• Interest rates: It is the rate charged on the lent amount. The rate of interest also varies from lender to lender, depending on the lent amount and type of credit

What are the benefits of the calculator?

The essential benefit derived from an EMI calculator is gauging how much money you will spend monthly towards the loan. This way you do not strain your finances. The other advantages include:

• Accessible: You can access the instrument anytime and anywhere.

  You can also provide input as many times possible. You do not have to visit the lender to figure out the mathematical calculations

• Accuracy: Calculating physically comes with the risk of committing errors. Furthermore, doing the same calculations could lead to more mistakes and incorrect results.

  The loan EMI calculator offers error-free calculations instantly

• Saves time: Comparing different loan schemes offered by various lenders is very tedious and time-consuming as you are using the same formula. Doing it manually means spending more hours to figure the EMIs.

  This unique tool saves you precious time and completes the lengthy calculation in a jiffy

• Financial planning: You know the amount you have to pay, tenure, and interest rate while calculating the EMI. This helps you prioritise your finances
• Types: The best part about an EMI calculator is there is one for every loan, be it car, bike, personal, home, or education. The parameters may be the same for every calculator, but you might feel the need to use a specific type