Total Borrowing Cost
₹0.00
What is Loan Calculator?
Loan calculator is like a digital helper that people or businesses can use to figure out how much it will cost them to borrow money. You put in details about the loan, like how much you want to borrow, the interest rate, how long you'll take to pay it back. The calculator then shows you how much you need to pay every month, the total interest you'll pay over the whole loan period.
What is Loan EMI?
EMI means Equated Monthly Installment. It's like a fixed amount of money that you, as a borrower, pay to the lender every month on a specific date. This payment covers both the interest (extra money for borrowing) and the original loan amount. The cool thing is, the EMI stays the same each month, making it easy for you to plan your budget.
Calculating Loan EMI
The formula for calculating Loan EMI's can be expressed as follows:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
Here are the key components involved in the formula:
- Principal Amount(P): It's the initial amount you borrowed, called the principal.
- Interest Rate(R): This is the monthly interest rate, a fraction of the yearly interest rate.
- Tenure(N): The total number of months you'll be repaying the loan
Now, let's consider an example:
Suppose you are taking a loan of ₹10,00,000 for 10 year at a 10.5% rate.So, the amount to be paid will be
EMI = ₹10,00,000 * 0.00875 * (1 + 0.00875)120 / ((1 + 0.00875)120 - 1)
EMI = ₹13,493
You have to pay ₹13,493 for 120 months to repay the entire loan amount. The total payable amount will be:
Total Amount = ₹(13,493 * 120)
Total Amount = ₹16,19,220
The total interest for the given loan is ₹6,19,220.
Why Use a Loan Calculator?
A Loan Calculator is a simple yet powerful tool that provides clarity on the financial commitments associated with borrowing money. Here's a breakdown of how it works:
Loan Amount:
- Input the amount you intend to borrow. This could be for a home, car, education, or any other financial need.
- Pop in the interest rate. It's like the 'rent' you pay for borrowing money.
- Choose how long you want to take to pay it back.This is the number of months or years for your repayment.
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