3 Benefits Of Using An EMI Calculator

An EMI is also called Equated Monthly Installment which is the amount a borrower has to pay a financial institution each month to repay the loan. This amount is calculated keeping in mind three factors which are the principal loan amount, the tenure of the loan and the interest charged. All financial institutions now provide EMI calculators for their customers free of cost. The benefits of using an EMI calculator are:

Accuracy

Borrowers must always use this calculator to calculate the amount of EMI they have to pay the bank each month. Calculating this amount manually may lead to mistakes which may cause the borrower to repay the wrong amount to the bank. This can also be called as defaulting on a payment. Doing so has serious consequences. In the case of borrowers who have applied for a home loan or a loan against property, defaulting may force the bank to seize their house or property and resell it to recover the loan amount. Defaults also lead to bad credit score which may affect the borrower in future if they wish to apply for a loan.

EMI break up

The EMI a borrower pays each month to the financial institution is divided into the interest charged and the principal amount of the loan. An EMI calculator not only calculates the individual’s EMI amount but also provides information about how much home loan interest and principal amount is repaid each month. This helps in a number of situations and is important for all borrowers to be aware of it. In the beginning of the repayment of the loan, the EMIs have a larger percentage of the interest charged while during the final years the EMIs have a larger percentage of the principal loan amount. This information is extremely valuable for borrowers who wish to repay their loan in advance.

Time saving

The EMI calculator is a time saving device as borrowers no longer have to visit a financial institution to find out their EMI charge for the month or calculate it on their own. In the case of individuals who have opted for a floating interest rate, this tool helps them calculate an optimistic and pessimistic EMI amount depending on the change in interest with ease.

There are a number of benefits of using an EMI calculator. It is reliable, accurate and time saving which is beneficial for all borrowers. All individuals who plan on applying for a loan must use this tool to ensure they repay the correct EMI amount on time and avoid defaults.