EMI Calculator: An effective tool for effective financial management

Management is one of the most critical aspects of personal finance. Keeping track of your expenses, savings, and investments can be pretty challenging. However, with the advent of technology, several financial tools have emerged, which have made financial management more accessible and convenient. One such tool is the EMI calculator, which has become essential to financial planning. In this article, we will discuss how to use an EMI calculator to manage your finances effectively.

An EMI calculator is a financial tool that calculates your Equated Monthly Instalment (EMI) for a loan. The EMI is the amount you pay the lender every month for the loan amount you have borrowed. The EMI calculator takes into account the loan amount, interest rate, and loan tenure to calculate the EMI accurately.

Planning your finances can be a daunting task, especially when it comes to big-ticket purchases like a home or a car. However, with the help of an EMI calculator, you can easily calculate your monthly instalments and plan your finances accordingly.

The formula for calculating home loan EMI is EMI = [P x R x (1+R)^N]/[(1+R)^N-1], where P is the loan amount, R is the interest rate, and N is the loan tenure in months. These factors are taken into consideration when calculating your EMI. The loan amount is the amount you wish to borrow, the interest rate is the rate at which the loan will be charged, and the tenure is the duration of the loan.

Once you enter these details into the EMI calculator, it will calculate the potential monthly instalment you must pay. The EMI calculator will also show you a breakdown of the total interest and total amount payable, including the principal amount.

Several factors affect the EMI amount for a home loan. These factors include:

Did you know in the FY - 22 to 23, the number of credit accounts in India rose to 7.36 crores as of March 2022? Finance experts now predict that by FY 2027, credit account transactions will reach close to 51.72 trillion.

If you are planning to make use of the opportunity and join the rising herd, it's important to understand the various options available to you in the market and choose something that will not burn a hole in your pocket. 

The first thing, then for you to do is to check if the proposed monthly installment is a feasible amount for you to repay comfortably. Enter - EMI Calculator. This will be of immense help to you while cross checking different options available to you in the market.

An EMI Calculator - 

It is important for you to understand how your EMI’s are being calculated. If you opt for a floating interest on your EMI plan, it means that your monthly EMI instalment may vary according to the current floating interest rates in the market. 

For example - if you have opted for a floating interest on your loan, depending upon the market interest rate your monthly EMI’s may increase or decrease duly depending upon the fluctuation in the market. Your premium or the principal amount will be standard and only the interest amount may vary.

Here are some tips for using the EMI calculator effectively.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes.