In the current era, we often come across the term EMI (Equated Monthly Instalment) in our everyday lives. Look around you. Almost every gadget or appliance you see can be purchased easily on EMI. Due to a small amount paid monthly, one doesn’t have to go all in with their savings.
Now, we all have encountered the situation of either student loan, car loan, home loan or any similar type of loan. It is a well-known fact that whenever we are in the process of availing the loan scheme, we try to calculate EMIs in our mind or on blank paper. But sadly, these figures are mostly inaccurate, sometimes affecting the ultimate plan. This is where an EMI calculator app steps in.
What is an EMI?
It is a fixed amount of payment made by a borrower to the lender each month on a particular date. This date is pre-determined at the time of lending the loan. Remember, the instalments are applied to the principal and interest amounts so that the loan is smoothly paid off in steps over a specific period of years.
Now, once you download EMI calculator app, you are on the profitable side. This is because you’ll know exactly how much you’ll pay each month so that you can chalk out your financial plan smoothly. On the other hand, the lender also profits with a constant income flow.
How is an EMI calculated?
Even though a single EMI calculator download makes things super easy for you, it is still a positive point if you know the science behind it. Notably, an EMI includes three major factors; Loan amount, Rate of Interest and Tenure. However, the mathematical formula to calculate EMI is
Loan Amount x Rate of Interest x (1 + Rate of Interest)Tenure/((1 + Rate of Interest)Tenure – 1)
Considering the above-mentioned three governing factors, the EMI payments are directly proportional to the loan amount and interest rates and are inversely proportional to the loan tenure. So, the higher the loan amount or interest rate, the higher the EMI payments and vice versa. However, in the case of loan tenure, though the amount of total interest to be paid increases along with the increase in tenure, the EMI payments gradually decrease with the increase in tenure.
How to calculate EMI via an EMI calculator app?
Now, several applications are available on the Play Store or App Store. However, it is better to share my personal experience here of which app I use for this purpose.
Around six months ago, I was planning to go for a home loan. I use the Bajaj Finserv application for all kinds of digital payments, and in this app only, I came across the calculators. Here is a step-by-step guide on how you can avail this facility –
- Download and Install the Bajaj Finserv application on your smartphone
- Sign up with your details
- On the home page, click on the top left at the three bars.
- Here, you’ll see an option of ‘Try our Calculators’
- Further, click on ‘EMI Calculators for Loans’
- There are three types of calculators available – EMI Calculator, Flexi Day Wise Interest Calculator and Flexi Transaction Calculator
- Proceed further as per your requirements