Are you considering taking out a loan but worrying about your monthly EMI? You may be debating whether it is necessary to know your EMI before applying for a loan.
Look no further if you are looking for the best and most accurate EMI calculator BD. Read on to find out how an EMI calculator can help you and why you should use an EMI calculator before applying for a loan.
What is an EMI calculator?
An EMI calculator is a tool offered by most banks and financial institutions and can be found on their websites. It can calculate how much you will have to pay monthly over your loan tenure.
Besides, an EMI calculator helps you determine your loan amount and how much you should spend monthly to pay the loan. It can help you choose the interest rates you need to pay depending on your loan amount and tenure.
It uses metrics such as your loan amount, the provided interest rate, and your preferred tenure. You can input different values of the mentioned metrics to find the EMI that is best suited for you.
How does an EMI calculator work?
The EMI calculator determines your EMI based on the inputs you have entered into the tool. The inputs the EMI calculator uses include:
Loan amount
This is the amount of money you need to borrow from the bank. The amount mostly depends on what you need and your ability to repay it. Regarding home loans, most banks offer around 80% of the property’s value. This is the principal amount of your loan.
Interest Rate
The interest rate is the amount of interest charged on the amount that is lent to the borrower. This rate varies in different institutions and also depends on the market situation. Before making a purchase decision, you need to know the offered interest rates.
You choose to have either a fixed or floating interest rate. In fixed interest loans, the EMI will remain the same, but in floating, the EMI may vary depending on the current interest rate.
Tenure
The loan tenure is the timeframe agreed upon by the borrower and lender, within which the borrower will be expected to repay the loan. Most loans have flexible tenures that you can choose between depending on your ability to repay the loan.
Home loans usually have a longer tenure which can even go up to 30 years, but remember, the longer the tenure, the more interest you will have to pay.
When calculating EMI, remember to choose an EMI amount that does not exceed 40% of your monthly income, as any higher than that can hamper your ability to repay the loan.
Why should you use an EMI calculator?
An EMI calculator is a very easy-to-use tool with many benefits. Below are a few of them:
Ease of use
EMI calculators have made it easier than ever to calculate your monthly installments. It is very user-friendly and doesn’t require any technical knowledge to use it. All you have to do is enter your loan amount, interest rate, and preferred tenure, and with a few clicks, you will have your EMI.
Accurate results
Although it is possible to calculate your EMI manually, it is a very complicated process involving multiple variables and prone to error. It can become time-consuming if you want to experiment with multiple loan tenures, amounts, and interest rates. Therefore, an EMI calculator is a sure-fire way to get accurate results much faster.
Easier comparisons
When it comes to an important decision like taking out a loan, you must do your due diligence and compare the offerings of multiple other banks and financial institutions to make an informed decision.
Loan Planning
The main purpose of EMI calculators is to make it easier than ever for people to find their monthly loan installments. EMI calculators also provide an amortization schedule, making it easier to visualize how you will repay your loan.
This schedule can make it easy for you to plan your payments and avoid the possibility of defaulting. Having this knowledge can help you get an idea of what lifestyle changes you will need to make to accommodate the payment of the EMI. Paying back a loan can be extremely difficult without proper prior planning.
Free of cost
The EMI calculator is a free-of-cost tool that is available to everyone. You don’t need to enter your personal information to determine your EMI. This is very convenient compared to previously, people who have to either physically visit a bank or hire the services of a financial planner to find EMI.
Conclusion
Using an EMI calculator is a fast and easy way to determine your monthly loan installments and helps you plan your payment schedule. You don’t need to run around and visit multiple banks to assess the loan offerings that are most suited to you. Rather, using the home loan calculator, you can do everything from the comfort of your home.
