Opting for a loan and deciding the amount of loan is one of the most significant financial decisions. The amount of interest you are going to pay henceforth will have severe consequences on your monthly budget. So, you need to be capable of determining the interest on a loan. If you have to pay an EMI within your financial reach, you will be able to handle the monthly expenses well. However, if the amount of EMI is far more than what you can afford, you may soon start facing financial hurdles in your daily life. To ease out your dilemma, you can avail the facility of Loan Calculator, and calculate the amount of monthly interest that you will be paying for the coming years.

What is Loan Calculator

Loan calculator helps you determine the monthly payment of a loan. It gives you an estimate of the interest amount you will require to pay on a monthly basis for the loan you have availed. In a way, it helps you decide the amount of loan you can apply for, for your needs. EMI calculators online can do the needful for you.

EMI Calculation Formula

Flat Rate Interest Method

If you are opting for Flat Rate Interest Method, the interest will be levied on the total loan amount regardless of the principal amount that you have already paid back.

The EMI calculator formula by Flat Rate Interest method is:

EMI = Principal + Interest / Period in Months

The car loan EMI calculators generally use this method.

Reducing Balance Interest Method

If you are opting for the Reducing Balance Interest Method, the interest will be levied on the remaining or the outstanding balance of the loan amount after repaying a certain amount of principal on a monthly basis. In this case, the EMI will remain the same. However, the interest component in the EMI will keep reducing every month.

The EMI calculator formula by Reducing Balance Interest Method is:

EMI = [Principal x Rate of Interest x (1 + Rate of Interest)^ Loan Duration in Months] / [{(1+Rate of Interest)^Loan Duration in Months} – 1].

Usually, EMIs under this method is lower than that in the flat rate interest method. In this method, the interest component also keeps reducing every month. This, in turn, helps you to save the cost on the loan. This method is used in personal loan EMI calculators.

EMI Calculators Online at PaySense

With the advent of technology, calculating EMI has become easier through EMI calculators available online. PaySense offers online calculators wherein you can input the amount of loan you are planning to avail and analyze options based on the monthly EMI amount that would be comfortable for you to pay. Using our website or application, you can apply for loans according to your requirements. You can avail the loan amount in three simple steps and ease out your financial worries with PaySense – the best option for easy, instant and hassle-free loans.