Equated monthly instalment (EMI) calculators are online tools that help you calculate the monthly instalments you have to pay on your loans. Although they are extremely easy to use and very useful, some people still refrain from using these calculators. And many of those who do use them have several doubts. Here are some of the common questions about EMI calculators and the answers to them.
FAQs about EMI calculators
1. What is an EMI?
When you take a loan, you usually pay it back in monthly instalments. These instalments, called EMIs, consist of a part of the loan principal and a part of the interest. When you add these two parts, the sum becomes the EMI. This entire sum gets broken up into smaller parts known as the EMIs.
2. What is an EMI calculator?
An EMI calculator is an online tool that tells you the exact amount of EMI you have to pay each month. You have to fill in a form with the details about your loan, including the principal amount, tenure, and rate of interest. The calculator will tell you what your EMI liability will be at the end of each month.
3. Where are EMI calculators available?
Most banks and non-banking financial companies (NBFCs) have EMI calculators that can be accessed on their websites. There are independent calculators available on the internet as well. Also, the calculators are available as smartphone apps. You can download and use them free of charge.
4. How accurate are the EMI calculators?
In most cases, EMI calculators are accurate. You almost always end up paying the EMI amount that the calculator told you. However, it is always advisable to check with your bank/NBFC before you take the loan. There are several reasons behind this. At times, lenders change their rates of interest at the last moment. This can impact your EMIs as well. So, take the estimate from an EMI calculator but check with the lender as well.
5. Are EMI calculators and EMI simulators the same?
No, they are not the same. An EMI calculator tells you the exact amount of money you have to pay each month. An EMI simulator gives you an approximate figure. It arrives at the figure after taking the various factors into consideration.
6. Why should I use an EMI calculator?
An EMI calculator gives you a realistic look at your personal loan. You should always take a loan that is affordable and easy for you to repay. Check the EMI that you have to pay before you take the loan. If the amount seems too big, opt for a loan of a smaller amount. This can help you manage your finances better in the long run.
The bottom line
EMI calculators are accessible and are simple to use as well. So, if you are planning to take a loan, make sure you use an EMI calculator. This can give you a good idea of how much the loan may cost you. If you are happy with the figures, go ahead and apply for the loan.