One of the popular means of repayment of loans is through EMIs or ‘Equated Monthly Instalments’. It refers to the total amount to be paid every month until the loan has been fully repaid with interest. In case of loan EMIs, the amount to be paid consists of two parts – the principal amount and interest on the loan.
Even though the amount paid will remain same, the business loan EMI calculator will vary the percentage of interest and principal recovered each month. The interest component of the EMI would be larger during the initial months and gradually reduce with each payment. The exact percentage depends on the interest rate. With each successive business loan EMI payment, you’ll pay more towards the principal amount and less in interest.
Determining the exact EMI to be paid is important to SMEs. It will help in planning the cash flows and the repayments. This is where a business loan EMI calculator (also known as term loan EMI calculator) comes in handy.
The EMI payable depends on three main factors – the total amount of loan, the duration of borrowing and the rate of interest agreed upon. The formula used by EMI calculator for business loans is as follows:
E = EMI payable (each month)
P = Principal loan amount
r = Rate of interest per month (i.e., annual interest is recalculated for a monthly basis)
n = Duration of loan (in number of months)
There are two ways of putting the term loan calculator to work. The first is to compute the EMI manually and the second is to use an online tool. Even though both approaches will lead to the same result, an online business loan interest rates calculator is more fun and simple to use.
In 3-4 simple steps, you can determine the amount to be paid using business loan EMI calculator.
After keying in the data, the business loan calculator will give you the exact EMI payable.
In addition to sparing you tedious manual computations, a business loan EMI calculator offers many benefits, such as: