Today, is the age of loans. Money is always in short supply. What choice do you have, but to take a loan? Let’s lighten the load with a funny joke…..
“Always live within your income, even if you have to borrow money to do so.”
You want your own home? Well….just avail a home loan. Need a car badly? There’s a car loan for you. Need money for your daughter’s marriage…. There’s a personal loan, waiting for you. Whichever loan you avail, one thing stays constant. Equated Monthly Installments also called EMI’s. If you need a loan really badly, you better familiarize yourself with EMI and how it’s calculated. Want to know more about EMI?
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You avail a loan from a reputed bank in India. You have to repay this loan with interest. EMI is just the amount you (borrower) repay to the bank, each calendar month, to clear your outstanding loan. You have to repay the EMI each month, on a particular fixed date, for the entire duration (tenure) of the loan, till you repay the entire outstanding amount. (amount borrowed + interest).
EMI is a combination of the principal and interest, you have to repay on the loan.
EMI = EMI (Principal) + EMI (Interest)
During the initial years of the repayment of the loan, most of the amount you repay, goes towards paying the interest on your loan. Most of your initial repayments are towards EMI (Interest). As your loan matures, most of the amount you repay, goes towards paying back the EMI (Principal) on your loan. The outstanding amount on your loan, soon reduces.
The EMI of your loan depends on:
Amount of loan: The amount of loan you have borrowed from the bank.
Rate of interest: This is the interest, the bank charges on the loan.
Tenure: The time you have to repay the loan with interest.
The formula for calculating EMI is:
P = Loan amount availed from the bank
I = Interest rate charged by the bank per month
N = Number of installments
Let’s check out EMI calculations, with a simple example. You have availed a loan of INR 1,00,000 from a bank. You have to pay an interest of 12%, with a loan tenure of 12 months.
You have to pay an EMI of INR 8,885 on your loan.
IndianMoney.com has developed calculators, to calculate EMI on your car loan, home loan and even personal loan.
Take a look at our car loan EMI Calculator, which gives you the car loan EMI, depending on the loan amount, annual interest and loan period you avail the loan.
Just click here and get to know your car loan EMI.
You can check out our home loan EMI Calculator, which gives you the home loan EMI, depending on the loan amount, annual interest and loan period you avail the loan.
Just click here and get to know your home loan EMI.
You can check out our personal loan EMI Calculator, which gives you the personal loan EMI, depending on the loan amount, annual interest and loan period you avail the loan.
See also: No Cost EMI
“Good times are when people make debts to pay in bad times.”
- Robert Quinlin
Yes….you need a loan in these bad times. Understand what is a good loan and a bad loan, before you avail a loan. If you know how to use a loan, it can be a true friend in an emergency. Be Wise, Get Rich.
Mr. C S Sudheer is the founder and CEO of IndianMoney.com – India’s largest Financial Education Company. He started his career with ICICI Prudential Life Insurance and later on worked with Howden India. After his brief stint in Howden India, he moved on and incorporated Suvision Holdings Pvt Ltd which is the sole promoter of IndianMoney.com. He aims to build a nation that is financially literate with investment savvy citizens.
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