Media release
Mangaluru, Dec 3: Borrowing finances can be used to expand business enterprises, purchase equipment or manage working capital. It is important in effective financial management to understand what portion of your earnings needs to be allocated monthly towards repayment of such debts. In this case, you must utilise an EMI business loan calculator so that you do not borrow an amount less or more than what you will be able to repay within a stipulated period of time.
In this article, we will explain how to use an EMI calculator and why it is important for financial planning in simple terms so that you can easily understand.
What is an EMI?
Before we explore how the EMI calculator functions, we must first define “EMI”. EMI stands for equated monthly installment. It is a fixed sum of money that you pay every month as loan repayment. The EMI comprises two parts: the principal amount (which is the actual loan you took) and the interest charged by the lender.
In India, most of the time business loans are paid through EMIs which makes the Farmers’ Guide about EMI calculator a kind of priceless tool.
How Does the Business Loan EMI Calculator Work?
A business loan EMI calculator operates by considering three major aspects:
Loan amount – total credit you wish to borrow from the bank or any other credit institution.
Interest rate- the percentage at which the lender will charge interest on your borrowed sum.
Loan tenor- defines your intended duration of repaying the credit facility either in months or in
The calculator uses these details to provide you with approximate EMIs for each month in order to give direction on planning cash flows.
Why use an EMI Calculator?
Using an EMI Calculator has several benefits:
1. Accurate monthly repayment estimates: This means you can work out the exact amount that suits your firm every month.
2. A financial planning tool: To manage your money effectively, you should know the EMI you are likely to be charged in the future. Hence, you can plan ahead and set aside money that will ensure you do not delay your loan repayment at the expense of business
3. Loan options comparison: This can be done by changing either loan tenure or the rate of interest using an EMI calculator so that different loan options’ impact on monthly payments can be examined. It is a plus for one to make informed decisions.
How to Use a Business Loan EMI Calculator: A Step-by-Step Guide
Below is an easy step-by-step guide to how one can make use of a business loan EMI calculator:
1. Enter the loan amount
Always start by inputting the total loan amount that you would wish to borrow. If one needs INR five lacs as a loan, then he or she should type five commas zero, zero, zero.
2. Input the interest rate
Then go ahead and type down interest rates either annually or per annum depending on what has been given by your lending institution e.g., ten percent is entered into this box in case your lender offers 10% interest.
3. Choose the loan tenure
When borrowing any amount of money for one’s business operations in India, they specify the time within which it must be repaid back through equated monthly installment payments (EMIs); these periods range from one year up to five years
4. Click on calculate
After providing this information, click the ‘Calculate’ button. This will enable you to know how much you should be paying as your monthly EMI.
Key Points To Consider
EMI varies with tenure and interest rate
A longer tenure will mean that you pay less money each month, but you end up paying more in interest over the life of the loan. On the other hand, shorter tenures have higher EMIs and lower overall interest rates.
Impact of a high interest rate
A higher interest rate will result in an increased monthly EMI. Even a slight rate hike has consequences on your total cost repayable.
Affordability
The EMI you are charged should fit into your company’s financial plan. If it is too high, there may be cash flow constraints which can affect operations.
Repayment Planning Tips That Work
Below are a few tips to help you manage your loan repayments effectively so that they do not become an unbearable financial burden:
1. Pay yourself money out of each paycheck towards EMI — always set apart some funds from what you earn weekly or monthly for repayment giveaway before anything else touches them if seasonal business ensures capitalisation during lean months.
2. Prepay the loan if possible — if you have extra income from your business, consider repaying the remaining loan amount. Consequently, it will assist in the reduction of total interest for loan repayment over time.
3. You need to periodically check into the state of cash flow in your business — on the one hand make sure that your company can cope with all obligations under the EMI schedule, otherwise shorten its duration, or opt for refinance options.
The Bottom Line
A business loan EMI calculator is an excellent device that aids in planning repayments for a loan effectively. Utilizing such a device assists one in ruling out how much they will be expected to pay monthly and having an estimation of interest rate since it varies over time. If you want to make informed decisions use our calculator in cash management as well as ensure prompt loan.
Importantly, having sow repayment is crucial for good debt management practices in any business setting. Be sure to check out a business loan EMI calculator in order to be aware of what amounts you have to pay back each month and ensure operations go on without stoppage.