Equated Monthly Installment, commonly known as EMI, is an amount the borrower pays back every month on a particular date to the lender towards the repayment of loan taken by him. The EMI amount is calculated on the basis of the loan amount, interest rate and the tenure of loan. The borrowers' loan EMI comprises of the interest and the principal component. In the initial period of repayment the interest component in the EMI is significantly higher than the principal component. The components can be calculated using Apnapaisa Loan Amortization Calculator instead of the EMI Calculator.
One of the major factors that affect the loan eligibility of a prospective borrower is his ability to pay the EMI. Different banks presume certain portion of the borrowers' income as available for payment of EMI's of all loans. It varies from bank to bank and there is no standard norm or formula. But normally the bank will assume around 40%- 45% of the borrowers' net salary is available for payment of EMI to serve all the loans. Even the percentage which can be considered for servicing of any EMI can be higher for people in the higher income group. As the income rises the proportion of saving in monthly income goes up hence the higher proportion for servicing of any loan EMI.
The EMI calculator will help the borrower to find out his ability to service loan of a particular amount for certain tenure at a predetermined interest rate thus help in taking loan within his ability to service the EMI month after month. The EMI calculator will also give a break up of his EMI i.e. the principal component vis-a-vis the amount that you will be paying as an interest on that loan.
You can use one of the following calculators for the purpose of finding out the loan which you are eligible for and the amount of EMI which you will have to fork out every month. These calculators will also help you in taking decision about the value of the asset which you can buy whether it is a house or a car. These various calculators which can be used can be any of the following:
- Home Loan EMI Calculator
- Personal Loan EMI Calculator
- Car Loan EMI Calculator
- Loan Against Property EMI Calculator
- Education Loan EMI Calculator
The EMI Calculator can be used for calculating the EMI of any bank be it SBI, HDFC, ICICI, etc since only the default fields in the calculator would need to be changed.
As interest rate is not something that the borrower can decide, he can definitely increase / decrease the tenure to find a suitable EMI. The borrower can also increase the tenure to increase the loan eligibility amount. The borrower should keep in mind that any increase in tenure will result in higher interest component on same loan amount. Secondly, the borrower should also take into consideration that if the loan is on floating interest rate, the EMI is bound to change whenever there is a change in the repo rate announced by RBI or any changes in the base rate of the bank
For an under-construction property the borrower has to pay Pre - EMI, which is only the simple interest on the amount disbursed and it does not have any principal component. Some lenders do allow the borrowers to pay EMI for every portion of loan disbursed and the actual consolidated EMI starts after complete disbursement of housing loan.