Plan Your Loan Instalments Easily With an EMI Calculator

The entire human race has survived and sustained till date because it has been following the principle of interdependence. It is interdependence, which has given rise to different vocations and business, and has helped the human race to grow and flourish. Money is the best defined medium in the world, and is exchanged actively between humans in returns for services or products offered.

Still, at any point of time, every individual does not have his hands full of money. Sometimes, he may not possess the necessary amount of money to buy certain products, or avail peculiar services. At such times, he may wish to borrow money from banks or other financial bodies, through the provision of loans.

Loans have existed from the same time, when money started exchanging hands. Prior to banks, loans were actively offered by merchants or feudal lords, and the exact terms and conditions regarding the borrowing were never defined. But now, times have changed, as banks offer loans to individuals, based on a proven, well-defined methodology

For instance, a home loan is offered by banks to all the aspirants who dream of living in a home of their own. However, different banks offer levy variable charges, and the repayment structure of loan varies accordingly. The repayments are usually done in instalments, which are financially termed as EMI or Equated Monthly Installment.

However, the EMIs are known to vary based on the types of loans, and the additional processing charges levied by banks. But, borrowers can now get a brief idea of their EMI, by using an EMI calculator, which is readily provided by banks on their websites.

This calculator revolutionizes the loan lending process by giving the borrowers a complete idea of their borrowings within seconds. All the hassles of meetings, phone calls, emails, etc; get eliminated with this calculator. So, why go after loan agents for EMI calculations, when you can easily plan your loan with this revolutionary product.

4 Types OF EMI Options for Car Loans

Nowadays, you can easily drive in a car, if you have a stable source of income and a dream to own a ride. Your dream of owning a car can be easily made true by availing one of the numerous car loan options provided by banks and other financing bodies.

Despite of borrowing a loan, the most prominent concern, which will float all the time in your mind, is repayment of loan. Repayment of loan is a major concern among car buyers because any delay in the EMI can cost them their car. So, many people are known to scrutinize the loan documents carefully before applying for car loans.

Before you apply for any of the available car loans, take a look at these 4 types of EMIs, which will make the loan repayment process easy for you.

1.       Regular EMI

This is the most common type of EMI option available with majority of the car loans in India. It is available with loans that are having a fixed rate of interest. For the whole loan tenure, the EMI imposed is fixed, and covers up the principal amount and interest efficiently.

2.       Step-Up EMI

This is a special arrangement in which the amount of EMI increases as you progress through the loan tenure. The amount is lowest in the first year, and increases gradually with time. 

3.       Step-Down EMI

This option is the reverse of Step-Up EMI. In this, the EMI amount decreases with time. However, the interest rate levied on such loans is comparatively higher than the normal loans.

4.       Balloon EMI

This is a where special case wherein the borrower is allowed to pay up to 20% of the principal amount at the end of the loan’s tenure. The rate of interest charged is much higher than the rest, but this method helps to reduce the initial burden of repayment on the borrower.

These 4 types of EMI options are easily available for car loans in India.

How to Calculate Car Loan EMI Manually

Two weeks back, Mr. Arshad was keen to buy a car. After contacting several car dealers, he was able to hitch a ride. The cost of the car was Rs. 5, 35,067, and he was sanctioned a loan of 4 lacs. The remaining amount was paid as downpayment by him.

Mr. Arshad secured this car loan at a discounted rate of 11.25%, and for tenure of 3 years. He had to pay processing fees of Rs. 4350 along with the taxes. He had to pay an EMI of Rs. 13,021 monthly. However, Mr. Arshad was feeling that he was paying more. Like Mr Arshad, many of you may be thinking that their car loan EMI is much higher. There are not convinced by the results of EMI calculator, and prefer crunch the numbers manually.

If you doubt about your EMI amount, then follow these 2 methods, which will help you to calculate the EMI manually. The first method requires you to possess a computer and a spreadsheet program while the second method demands a paper and pencil along with simple mathematical skills.

Method with Excel:

The function used for calculating EMI in Excel is PMT. This function requires three variables, which are rate or interest rate of loan, nper or the loan tenure in months, and pv or present value of the loan. The formula is

EMI = PMT (rate, nper, pv), where rate is always in decimals.(eg: 11% = 0.11)

In Mr. Arshad’s Case, the EMI was PMT (0.1125/12, 36, 400000) = 13020.82374.

Method with Manual Calculation:

For those of you, who are not comfortable with Excel, switch to the basics of Mathematics. The interest charged is compound interest, and EMI is calculated from the overall amount. The formula for EMI is

EMI = [P x R x (1+R) N]/[(1+R)N-1], where P is the Principal amount, R is the rate and N is the loan tenure in months.

In Arshad’s Case,

EMI = [400000*11.25/100*(1+11.25/100)36]/[(1+11.25/100)36-1] = 13020.82.

By using these 2 methods, Mr. Arshad was convinced that he was paying the right amount. So, why not use it yourself and ward off all doubts regarding over-payment of EMI.

Floating Rate Home Loans are better than Fixed Rate Ones

The banking system in India permits borrowing of two kinds of loans. Fixed rate interest loans and floating rates interest loans. Recently, it has been observed that home buyers are inclined towards floating rate home loans, rather than fixed rate home loans. So, what makes these floating rate counterparts better than the fixed ones? How do these loans work? Do the EMIs for both the loans differ? How can they affect your monthly expense budget?

Fixed Interest Rate Loan:

The interest rate for these loans is fixed at the time of borrowing, and does not vary with the changing market conditions. Early EMI of this loan are used to cover up the interest while later EMIs are meant for covering the principal amount.

This loan is ideal for individuals who do not want their monthly budget to be disturbed by prevailing market conditions.

Floating Interest Rate Loan:

In this type of loan, the rate of interest is known to fluctuate according to the contemporary market conditions. The interest rate is calculated as the sum of fixed base rate and the floating factor. Generally, the base rate is expected to remain stable, while the floating factor varies with the condition of financial markets.

Differences:

Floating rates of interest are much lower than the fixed rates.  If a floating interest rate loan is available at 12%, then its fixed rate counterpart will be available at 15%. Even if tough market conditions arise, and the float rate is increased by 2.5%, still you will end up saving some money from your EMI amount. The rise in the floating rate is not fixed, and soon the rates will fall down back to original ones, or may be lower.

Floating rate interest loans help you to save money in the long run. Hence, they are becoming a favorite among home loan borrowers. 

Plan Your Home Loan with EMI Calculator

Every bird is seen returning to its nest, each evening. Like birds, you must be returning to your home, every evening. But, what if your home is rented, and you have to change it every time the contract ends?

Home is the place, where you relax and experience some finest moments in your life. Every piece of furniture in it, and every wall inside it, is known to carry a memory. Majority of you will be reluctant to drop the memories attached with home. So, why not opt a home, which will last with you for a lifetime?

For buying a home of your choice, you need ample amount of money. The prices of real estate are rising each day, and your savings may not be adequate enough for financing the purchase. For financing your home, you need to borrow a home loan. But before you jump into the deal, you need to decide some basic things like the amount of loan to borrowed, the loan tenure, the rate of interest, and the most important of all, EMI.

EMI of any loan is calculated by banking professionals. But, for making things easy and feasible, banks have started providing EMI calculators. An EMI Calculator is a web application hosted on bank’s website, and is useful to provide the quotes on loans. For instance, the calculator provided by HDFC is known to produce the installment amount, once you have entered the principal amount, tenure, and loan’s interest rate. You can use the sliders to alter any of these values easily.

On the same grounds, ICICI bank provides the loan installment calculator. However, you are required to open a few links before reaching it. The calculator provided by Union Bank is very simple. You are required to fill in all numbers, and a detailed result is available at end. Like these, there are many EMI calculators, which you are required to use, before borrowing a home loan.

How to Adjust Car Loan EMI in Your Monthly Budget?

You may be a child, or you may be an adult; the idea of owning a car will surely amuse you. However, the financing part of this luxury does put a toll on your monthly expenses. There are several cases, where people opt for car loans, but end up straining their monthly budget.

Before you decide to buy a car, make sure you check a few factors like budget, fuel economy, periodic maintenance cost, and the most important of all, the amount of loan EMI. Whenever you will opt for this luxury of owning a private set of wheels, you will need to make adjustments in the monthly expenses. 

For instance, your usable monthly income is Rs.50,000 and you have decided to buy a car in the range of Rs.5 lakh to Rs.6 Lakh. Initially, when you approach the car dealer, you will be asked to pay around 20% of total car amount in cash. For a car of 5 lakh, you are required to pay 1 lakh as down payment. Assuming that you pay1 lakh, you are now required to borrow a car loan of Rs. 4 lakh. Generally, companies like Magma Fincorp are known to charge 12% on car loans, along with some processing charge.

Based on the principal amount of 4 lakh, borrowed at 12% interest rate, you are required to pay Rs. 8898 as monthly installment. This figure is calculated for the maximum loan tenure of 5 years or 60 months. Apart from loan EMI, fuel expenses, tolls, and monthly maintenance will cost you around four thousand to five thousand. In this, you need to keep aside approximately Fifteen thousand every month for keeping the car.

So, before buying a car, you are required to adjust the calculated amount from your monthly expense budget. Only then it will be easy for you to enjoy the luxury of owning a car.