What Are the Advantages of Using an EMI Calculator Before Requesting a Business Loan?

What exactly is a Business Loan EMI Calculator?

When we need to calculate the Equated Monthly Instalment (EMI) before applying for an MSME business loan, the business loan EMI calculator comes in handy. You can determine your business loan EMI by entering essential information into the business loan EMI calculator. The EMI is computed automatically by the lender or financial institution based on the information supplied.

How does the Business Loan EMI Calculator function?

There is a method that financial institutions use to compute the interest rate and EMI on business loans, which you may use if you want to apply for one.

A business loan EMI calculator is a readily available tool that allows you to determine the amount you will have to repay throughout your loan tenure. Nowadays, EMI calculators are easily accessible online; all you need to do is enter your loan amount, loan tenure, and interest rate.

If you assess the EMI, you need to pay ahead of time. The calculator will help you compute your monthly instalments and the interest rate you will have to pay during the loan term. It is always wise to determine your monthly payback amount before applying for a business loan, as it will help you manage your monthly expenditure, future finances, and other areas.

The EMI calculator takes into account the following factors:

Loan amount

Repayment tenure

Interest rate

The formula employed is –

E = P*r *(1+r)n/(0+1r)n-1)

Where ‘E’ is the EMI, ‘P’ is the Principal Loan Amount, and ‘r’ is the monthly interest rate.

The loan’s tenure, or duration, is denoted by ‘n.’

The benefits of using an EMI calculator:

You will save time and effort

An online EMI calculator is the most convenient way to evaluate your monthly payments, helping you save significant time and work. You just need to enter the different variables required, and you’ll obtain the calculated amount without doing any arithmetic.

Obtain reliable results

Calculating the EMI amount on your own is prone to mistakes, which can negatively impact corporate financial planning. On the other hand, an EMI calculator is primarily reliable and gives you exact data as and when you need it.

Examine various lenders

Another significant benefit of computing your monthly instalments beforehand is to compare the EMI levels offered by various loan providers. This will assist you in selecting the best organisation to go ahead with and make an informed decision before you borrow a business loan for your needs.

Improved financial planning

The advantage of utilising an EMI calculator is that it allows you to better manage your money for the future. You can get a good idea of your monthly expenses and how much you can afford to spend on monthly loan payments.

Determine your financial capability

You may use an EMI calculator to see how much company finance is within your payback capabilities. You may then borrow an appropriate loan amount and choose a loan term appropriate for your company’s cash flow.

What variables influence the EMI of a business loan?

Loan amount – 

The amount you intend to borrow determines your EMI. When the amount is more, the EMI is greater; when the amount is less, the EMI remains less. However, it is also dependent on the loan’s term.

Interest rate –

 It is essential to select the loan interest rate carefully. When the interest rate is high, the EMI remains high, and when the interest rate is low, the amount remains low.

Tenure of repayment – 

Tenure is also a significant factor in determining loan EMI. A longer-term results in lower EMI, whereas a shorter tenure results in a higher EMI.

Even if the EMI remains the same, the interest and principal payments are not. These payments change monthly and continue to fluctuate, but the principal amount remains constant.

Conclusion

Securing a business or MSME loan using an EMI calculator is a simple procedure that can be accomplished by doing correct calculations, deciding on an appropriate duration, and choosing the loan amount. Calculating your business loan EMI before applying for any loan is generally good, so you are fully informed of the monthly payments you must make.

Calculating your EMI in advance is a great way to start the process of securing business financing. 

FAQs

Q. What happens if an EMI payment is missed?

Ans. If an EMI is missed, it will be rectified in the following amount, and the next EMI will be double the current EMI. In addition, late payment penalties will be imposed based on the banking institution’s Terms and Conditions.

Q. Who qualifies for a business loan?

Ans. Generally, the loan applicant should be between 18 and 65. Different regulations, however, may apply.

Q. Is it possible to minimise the EMI amount?

Ans. Yes, the EMI amount may be decreased by extending the loan’s term may reduce the EMI amount. Another approach to save money is to pay off the majority of the loan in one lump sum and then pay lower EMIs on the remainder of the loan.

Q. Can the EMI interest rate be reduced?

Ans. It is not feasible under any conditions. Throughout the payment term, it remains constant.

Q. Will EMI remain constant or alter in the future?

Ans. Typically, the EMI remains constant; however, if the government decides to raise the interest rate, the EMI amount will rise.

Q. Why should you calculate the EMI of a business loan before applying for one?

Ans. It is critical to calculate EMI before taking out a loan since it will clear the picture and allow you to acquire a loan with a reasonable EMI.