Loan EMI Calculator for Home Loan, Car Loan & Personal Loan

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The 'What', 'Why', and 'How' of EMI Calculators

Whether it's a car, or if it's a house, or something more mundane, like a mobile phone; if you've ever bought anything a little too expensive than the amount you can easily and readily pay, you must have come across the term EMI. Especially in India, people buying online prefer to use their credit cards and go for one of the EMI schemes available. And anyone having chosen to go the EMI way must have pondered upon the extra cost they have to pay this way. What's that about?

We'll see it here.

Equated Monthly Installment, is the money you pay each month to either the bank or a financial institution of any other kind that you took a loan from, till you haven't paid them back the principal loan amount plus the interest. Now, how do these big banks like HDFC, Axis, etc. calculate these monthly installments? A simple loan EMI calculator works by adding the interest to the principal amount, and dividing the sum by the total number of months you've chose to repay the loan in. Now, your installment for each months remains the same. But, the banks keep reducing the interest component of the EMI, allowing you to pay off more towards the principal amount, as you go on making your monthly payments. You will find that the proportion of interest and principal amount changes, as each month passes.




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What is EMI?

The formula that banks use to calculate EMI is:

E = [P x r x (1+r)n]/ [(1+r)n - 1]

where,

E = EMI
P = the principal amount of loan
r = the rate of interest
n = the duration in number of months, that is the loan term

The formula is pretty simple, but in order to calculate for really big sums of money, in case you've taken a car loan or a home loan, you would do better if you use an EMI calculator instead. Because, this formula would otherwise prove to be quite tedious, and the chances of making an error also increase this way. The alternative is, insert the right numbers into the calculator, and get your result in a matter of a second or so. In addition to the result being nothing but accurate, you will also get yourself a payment schedule and break-up of the total amount to be paid.

Home Loan Calculator:

One of the times when a person thinks of taking a loan, is when they're buying a house. Both on a personal, as well as financial level, deciding to buy a home is a pretty big thing. It entails a lot of research on your part to first know if you're really ready to make this big an investment or not, and then where should you apply for the loan. In terms of the home loan, you might just feel a little overwhelmed after looking at the huge amount and the long tenure; but, don't let yourself worry too much. First, look at the interest rates that various banks and institutes are offering. For instance you will find SBI loaning money at 8.30% - 8.60%, ICICI Bank at 8.35% - 8.80%, LIC Housing at 8.35% - 8.80%, HDFC Ltd at 8.35% - 8.55%, and so on, to people wanting to buy homes. And the process of making the right choice is through home loan EMI calculator. It is your ICICI, HDFC, Axis, SBI home loan calculators, amongst others that will aid in calculating the amount you will have to pay every month. Take SBI EMI calculator for example. You will just have to make an input of your total loan amount, rate of interest, and tenure. Once you do, the SBI loan calculator will do the rest. These being really long term loans, the tenure can go upto 30 years too.

Car Loan Calculator:

You want to buy your dream car, but you don't have that kind of money on you right now to make that big an investment. So what do you do? You look for EMI options. There are different schemes by different banks, and the schemes also differ if you buy a second-hand car instead of a new one, and so on. The only thing to keep in mind is, car loans are to be paid back, with full interest, within 5 years since you borrowed the amount. In case you fail to do so, then the lender would be within their rights to confiscate your vehicle and even auction it off to recover the balance amount you owed them. Using a car loan EMI calculator, hence, becomes more so important; for you'll have to extremely sure whether you'd be able to pay back the amount without a problem.

Personal Loan Calculator:

As the name 'Personal' loan suggests, you can apply for a loan under this category for anything personal, such as if you want to travel, or if you have medical expenses to take care of, and so on. The interest rate on this loan is usually higher than other, the reason being it is an unsecured loan. For the same reason, the loan duration for this one is shorter, comparatively. Again, a personal loan EMI calculator would help you understand how much would you have to pay overall (interest included), and consequently make an assessment whether taking a loan would be a good option for you or not. Checking various rates of interest, you will find Axis bank to have set its interest at 15.50 - 24%, Bank of Baroda at 11.5 to 16.5%, and SBI at 11.35 to 15.10%, amongst others. You should go through all the rates available in the market, and choose the one that suits the best.

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