What is an EMI?
EMIs are Equated Monthly Installments that are paid as part of the loan repayment process. The principal and interest are the two parts of an EMI. The principle is deducted from the loan amount you have taken out. The interest is paid to the lender as part of the loan's cost. This interest is imposed either on the entire amount for all EMIs or on the reduced or unpaid principal balance.
What Is A Business Loan EMI Calculator?
The business loan calculator is a free online tool that aids you in calculating the necessary monthly payment to repay your loan. The word EMI, or Equated Monthly Installment, refers to the loan provider's monthly payments. An EMI is typically constituted of two components: the principal amount borrowed and the interest accumulated. Interest is calculated at the rate given at the time the loan is disbursed.
You may use the EMI calculator to calculate your EMI by simply inputting the amount of your business loan, the loan's period, and the interest rate. By utilising the business EMI calculator, you can plan your payments effectively, manage your other debts, and simply repay the loan.
When you decide to take a business loan, you might have some loan amount and loan duration in your mind. You might also be thinking that what the EMI will be. In this case, the loan emi calculator will help you. A loan calculator has three key variables: loan tenure, loan amount, and interest rate.
If you borrow a business loan of worth Rs. 1,00,000 for the duration of 2 years at the interest rate of 14 per cent then you can enter these values in business loan calculator. The EMI amount will come out to be INR 4,992 with interest of INR 19,819. The overall amount will be INR 1,19,819.
How To Use A Business Loan Calculator?
Before you apply business loan, you must make several considerations to ensure that the loan you choose meets your financial needs. Although numerous banks provide simple loans at reasonable interest rates, it is critical to examine several options and make an informed selection.
If you're seeking a business loan, you're almost certainly going to return it in monthly installments (EMI).
You do not have to be a mathematical genius to figure out how much EMI you would need to pay each month to pay your loan in a specified period. All you need to know are a few fundamental phrases before you can begin utilising this handy money management tool to help you better manage your funds. They are as follows:
Principal Amount:
Loan duration:
The applicable rate of interest:
EMI:
It is the entire sum of money acquired that you must repay.
It refers to the period over which you must repay the loan.
It is the rate at which you and the lender agree to charge interest on the principal amount.
The Equated Monthly Instalment, or EMI, is the monthly payback amount you must pay according to the amortization plan agreed upon.
How to Calculate Loan EMI?
As per the formula,
EMI calculation formula
E= P x r x (1+r)n / (1+r) n-1 Here,
- E = EMI amount
- P = Principal amount
- r = Rate of interest
- n = tenure of thconce loan
Due to the effort involved in manually calculating the monthly EMI payment, companies have developed EMI loan calculators. Simply enter your loan number, loan tenure, and interest rate, and your EMI, as well as the total interest due, will be displayed. It takes care of the tedious work for you, allowing you to concentrate on completing your loan application and organising your documents.
For Instance:
- Business loan amount = ₹ 3 lakh
- Interest rate = 20%
- Tenure = 3 years
- As per the formula interest rate per month will be 20/12= 1.66%
- Total tenure in months = 3x12 = 36 months
Therefore:
EMI= [3,00,000 x 1.66/100 x (1+1.66/100) ^ 36 / [(1+1.66/100) ^ 36 – 1)
You will get your EMI= Rs. 10,000
This method is not only time-consuming but also subject to human error. As a reason, it is safer to utilise an online EMI calculator, which is conveniently accessible via the internet.
Indifi Business Loan Interest Rates & Fees
| Customized Interest Rates | Starting @1.5% PM |
| Processing Fees | 3% |
| Loan Tenure | up to 3 years |
| Pre-closure Charges | 4% |
| Eligibility Criteria | > 5L Turnover in last 6 Months |
| Loan Amount | ₹ 50,000 – ₹ 1 Crores |
| Installments | Monthly |
Why Do You Require A Loan Calculator?
It saves you from the tiresome calculations. Gone are those days when you used to calculate your monthly payments on a paper. Now, you can enter some details and click enter. All work is done by loan calculator online.
Beneficial for financial planning- Business is a risky affair. Financial decisions are hard to make as they involve a large amount of money. Also, the effects of non-payment of business loans are the same as of the individual loan. If you are aware that how much EMI and interest amount you are paying monthly then it will be easier to plan your finances and to make other financial decisions.
Visualization advantages- The business loan EMI calculators show your payments in a visual format by using diagrams and pie charts. It is proven that visual depictions are easier to understand as compared to normal written text.
What Impacts Loan EMI And How To Reduce Your EMI?
So, till now you must have calculated the estimated EMI amount but maybe it is high for you and you want to reduce EMI amount. Hence, it is important to know how to decrease EMIs what impacts your EMI. The key factors that affect monthly EMI are discussed below:
Loan Tenure:One of the key factors that affect the EMI amount is loan tenure. Loan tenure is the time period over which you will repay the entire loan amount. Longer loan tenure means that repayment amount is strained to many years and hence it is lower. But the interest also increases with the duration of time. It needs a great thought as the principal amount to be paid monthly is decreased over a long duration and accumulated interest also increases. Hence, you must try all possible combinations of the rate of interest and loan tenure by using the calculator online and select the best one.
Rate of interest:Rate of interest is important for the EMI amount. Rate of interest is a competitive factor for a financial institution as a low-interest rate attracts more customers to the bank to get a loan. It is therefore essential to explore interest rates from all institutions. After research, you can select one that is best for the loan amount. The higher the rate of interest, higher is your EMI and less is the rate of interest lesser will be the EMI amount
Loan Amount:Loan amount is a key factor of EMI calculations. As the principal loan amount is the basis for EMI calculations, it makes sense to tweak loan amount a little. The higher the loan amount, the higher is the EMI and less is the loan amount, lesser is the EMI. You have distinct needs that involve a large sum of money that is why loan amount is you would not want to move at.
Business is a risky affair and requires cash inflow per month. You must be prepared for future expenses. If you know how much money is required every month then you can apply for the loan and take the financial decision more aptly. Hence, this is where the advantages of using the loan EMI calculator comes up. We have mentioned the entire guide of how an online businesss loan calculator work and will be able to help in getting the right business loan online.
Floating Rate EMI Calculation
Interest has always been a determining element in determining the most cost-effective financing solution or profit-generating investment strategy. However, in addition to the interest generated, the neighboring rate is critical in making a favourable selection. With that said, consumers must make it a point to educate themselves about different forms of interest, such as variable rate and fixed rate, to make an informed choice.
What is the Floating Rate?
The floating rate definition implies that it is an interest rate that fluctuates in response to market conditions or an index. Since a floating interest rate may fluctuate during the duration of an investment or loan, it is also referred to as a variable interest rate.
Notably, a change in floating interest rates is dependent on a 'benchmark,' or a reference point that is uncontrollable by the partners to an investment. This spot rate is comparable to the prime rate. In the case of variable interest rates on loans, the reference point is the lowest rate that commercial banks can charge creditworthy borrowers.
When compared to fixed-rate debt, floating-rate credit alternatives are more cost-efficient in the long term, despite their reliance on the yield curve. Individuals, on the other hand, can obtain steady and predictable returns on investments with variable rates over time.
We recommend that you compute floating rate EMI using two polar opposite scenarios, namely an optimistic (deflationary) scenario, and a pessimistic (inflationary) scenario.
- Optimistic (Deflationary) Scenario:
- Pessimistic (Inflationary) Scenario:
Assume that interest rates fall by 1% to 3% from their current levels. Consider the following scenario and compute your EMI. In this case, your EMI will decrease or you can choose to shorten the loan term. For instance, if you take out a business loan to invest in a business, an optimistic scenario enables you to compare it to alternative investment options.
Suppose that interest rates are increased by 1% - 3%. Is it conceivable for you to keep paying the EMI with little difficulty? Even a 2% increase in the interest rate might result in a considerable increase in your monthly payment throughout the life of the loan.
This type of computation enables you to plan for such future scenarios. When you take out a loan, you are committing to pay it back over the following several months, years, or decades. Therefore, evaluate both the best and worst-case scenarios...and be prepared for both. In a nutshell, hope for the best but prepare for the worst!
Business Loan EMI Calculator Frequently Asked Questions
Why should you calculate the EMI before borrowing a business loan?
Can the EMI amount and interest be reduced?
What if somebody misses his/her EMI amount?
Does the emi change in the future?
How old a loan applicant should be?
Taking a financial decision regarding a business loan is quite crucial, especially when it’s a big amount impacting your growth. It’s always good to take an informed decision with respect to the monthly cash outflow or the EMI payment a business will have to make on the business loan it opts for. EMI will vary depending on the loan amount, loan tenure and interest rate.
Interest rate is ascertained basis your credit history. However, EMI on your business loan depends on the loan tenure you opt for. By maximizing the loan’s duration, the EMI amount can be reduced. Or you can make a part payment depending on your cash flows to reduce the EMIs. You can use the calculator to get the EMI amount as per your business needs. You should also check for reducing balance EMI calculator as a lot of offers work on reducing balance which reduces the interest payment.
If somebody misses the EMI amount, it will be charged with the next EMI which will become double of the present EMI. Moreover, a late fine will be charged, based on the T&C marked by the lender. Take an informed decision with an EMI loan calculator to avoid any EMI repayment delays.
Generally, the EMI doesn’t change; nevertheless, it can increase as per the government’s decision on increasing the interest rate.
A loan applicant must be between 21 and 65 years of age.
