Calculate your EMI beforehand.

Taking a loan for various purposes has become an integral part of our life. It helps the borrower achieve some important financial goals of life like: buying a dream home, completing higher studies or buying a car for family convenience. Depending on the need, there are various loans for different purposes. The huge sum of loan taken from the financial organization is repaid in the form of EMI. It is the equated monthly installment, the stipulated monthly deduction from the salary account or from loan account where the borrower deposits money for repayment of the debt.

Basically there are three factors that decides the EMI, they are: the loan amount, interest rate and loan tenure. In this age of technology one does not have to indulge in the mind boggling manual calculations. One can get the job of heavy calculations done with the help of online EMI calculator. One has to enter the loan amount as principal amount, the interest rate at which the loan has been taken and number of installments, the online calculator would provide the amount of EMI one has to pay. The EMI is directly proportional to the loan amount and interest rate and is inversely proportional to the loan tenure. This implies that the EMI increases with the increase in loan amount and interest rate and decreases with increase in the loan tenure.

Calculating the EMI beforehand with the online EMI calculator is necessary for the one who have already taken a loan and also for the potential borrowers. From the debt-repayment perspective most of the borrowers are generally reluctant and under-prepared. Knowing the EMI amount one has to pay before applying for the loan, helps them to budget the monthly finance accordingly. Borrowers who use this tool are prepared and deal with the debt-repayment phase better than those who are reluctant to use this tool for their own benefit. The difference is visible with the credit scores. A borrower armed with the EMI calculator is bound to have good score, but the borrower who doesn’t utilize the tool is prone to hit the defaulter list.

With the amortization schedule the borrower is provided with a table where the EMI is broken into principal and interest on month on month basis. It is an important document provided by the lending organization to the borrower which they must go through before signing the loan agreement.

The EMI changes with tenure depending on the following factors: if the borrower prepays the loan amount, if the rate of interest fluctuates in case of adjustable rate of interest or if the borrower wishes to extend the loan tenure.

Calculating the affordability beforehand with the help of EMI Calculator helps the borrower to avoid poor credit score. With the fluctuating market condition this device allows the borrower to mould the debt repayment accordingly. One can save a good amount of money for future repayments when the interest rate comes down. Each and every borrower and potential borrower should use this online device for smooth loan tenure without the burden of debt repayment.