A business loan repayment plan demands careful planning, and paying your business loan EMIs on time requires efficient financial management so that your monthly budget does not dwindle. By using the Business Loan EMI Calculator available on Finserv MARKETS, you can determine your monthly EMI obligations so that your finances are in place.
The Business Loan EMI calculator on Finserv MARKETS is a simple online tool to estimate the EMI you would need to pay each month. There are three inputs that you need to enter to find out the EMI. They are:
Loan Amount: It is the loan amount that you want to apply for.
Rate of Interest: This is the amount that a lender charges on the principal loan amount. It is expressed in percentage terms.
Loan Tenor: This is the period over which you need to repay the loan.
The formula used to calculate Business Loan EMI is:
E = P * r * (1+r)^n / ((1+r)^n-1)
where 'E' is EMI,
'P' is the principal loan amount
'r' is the rate of interest calculated every month
'n' is the tenor or duration of the loan
The interest rate is the amount levied by the lender on the offered loan amount. It is expressed in the form of a percentage of the principal amount. There are two kinds of interest rates that are typically quoted to borrowers. One is the nominal interest rate, and the other is the Annual Percentage Rate (APR).
The nominal interest rate is the total annual interest rate levied by the lender. On the other hand, APR is the total loan cost that comprises the processing fee, interest fee, administrative fee, and more. The effective interest rate is calculated using the following formula:
(1+r^n)-1, where r is the periodic rate of interest.
There are innumerable benefits of using a business loan calculator. Some of the notable pros include:
Time-Saving: The calculator helps save on time that you would otherwise spend on tedious calculations and provides you with quick results.
Easy to Use: EMI calculators are simple to use. Once you enter all the required details, such as the interest rate, loan tenure, and loan amount, the tool will compute the results for you.
Error-Free Results: The use of the calculator eliminates the possibility of human calculation errors.
Aids in Comparison: The calculator helps you conduct a comparison between different offerings as well as different loan parameters.
Ensures Smart Budgeting: The use of the calculator ensures that you can do better financial planning as you are well-informed about your repayment obligations.
The business loan EMI is impacted by three major factors that include:
Loan Amount: The loan amount that you apply for comprises the base of your EMI. The EMI increases when your loan amount increases and vice versa.
Interest Rate: The interest rate is an essential component of a business loan. A higher interest rate will lead to a higher EMI cost, which is why you must strive to get a good deal on the business loan interest rate.
Loan Tenure: The loan tenure is the period through which you service the loan. A longer tenure will result in a lower EMI cost, and however, it will also impact the interest component and increase the same.
Missing an EMI payment can lead to a late payment fee. Moreover, missing a loan or credit card due date also has an adverse impact on your credit score.
Calculating the EMI beforehand can help you determine the amount you would need to pay each month so that you can manage your finances accordingly.
For loans availed on fixed interest, the EMI remains the same.
No, once the loan is disbursed, the interest component cannot be changed. You would need to undertake a business loan balance transfer to get better interest rates and reduce your interest liability. Another way, which is recommended, is to maintain an excellent credit score and negotiate the interest rates with the lender at the time of loan application.
EMIs can be paid online through NACH debit mandate, ECS, or cheque.