How can an online EMI calculator help you?
The number of credit accounts is growing at an even higher CAGR of 28% and has reached 107 million accounts at the end of FY18.
Regardless of the type of loan you want to avail of, be it a secured or unsecured advance, it is paramount that you know how much monthly instalment you have to make before you avail it. That is where an EMI calculator in India can be immensely helpful.
- It helps you get an accurate estimate of your EMI amount so that you can plan your finances accordingly. Make sure that your debt-to-income ratio is below 50% to maximize your chances of loan approval.
- A loan EMI calculator helps you save valuable time. You don’t have to do complex calculations manually, which can be quite time-consuming.
- It eliminates any chance of a miscalculation, providing you with an accurate estimate every time.
- It is highly specific for each type of loan. The EMI breakup of a home loan, for example, is different from that of a personal loan.
The formula to determine loan EMI amount
There is a specific formula that Groww uses to compute the EMI amount for a loan.
EMI = [P x R x (1+R) ^N]/ [(1+R) ^ (N-1)], where –
- P is the principal amount
- R is the rate of interest
- N is the loan tenure
This is the standardized formula used by any online loan calculator. Some variables may be added based on the type of loan.