Advantages of Using an EMI Calculator for Term Loan

Posted by Ankit Shrivastava
September 19, 2017

NOTE: This post has been self-published by the author. Anyone can write on Youth Ki Awaaz.

Small businesses regularly need funds to meet their cash flow needs and to tap new business opportunities. The interest paid towards servicing these loans thus forms a substantial chunk of their operating costs. Equated monthly instalment, or EMI, is a popular term associated with term loan repayment, and comprises of two components—principal and interest. Term loans are generally given on reducing interest basis, which means that in the initial months, the principal component is higher as compared to the interest amount and towards the end of the loan, the situation reverses.

It helps a small business to have access to an EMI calculator for term loan so that it can comprehend clearly the expenses to be borne in servicing a business loan each month. New age FinTech companies provide a term loan EMI calculator on their websites where you can easily check the monthly expenses associated with servicing a short-term loan. Such lenders use the latest technology tools to offer short-term loans at the most competitive rates. Their easy-to-use term loan calculator helps you to calculate your monthly liability for different short-term loans. It provides details about the two components that form part of your EMI—the principal and the interest on the loan. Through a term loan calculator, you can check the amount that you have already repaid as principal and as interest through previous EMIs.

Manage Your Cash Flow Better Using EMI Calculator for Term Loan

An EMI calculator for term loan offers you a detailed scenario of the tax liability each month with a particular loan product. Knowing the amount that you have to set aside every month for repaying your term loans helps you to plan your expenses accordingly. Through an EMI calculator for term loan, you can easily determine how much principal component has been paid till date. In the event that you want to pre-pay your pending principal amount, you can also calculate how that is going to impact your remaining instalments. On the contrary, if you do not have sufficient funds to pay the instalment or you inadvertently miss an instalment, the EMI calculator for term loan can again be used to check the revised EMIs to be paid during the remaining months. This helps you to keep a tab on your business expenses and prioritise loan repayments. The EMI calculator for term loan available online can also be used to set alerts regarding upcoming payments. There are three key parameters that an EMI calculator for term loan uses to process your monthly due—principal amount, loan tenure and interest rate.

The popular formula used by an EMI calculator for term loan is:


E= Equated monthly instalment or your monthly loan repayment liability

P = Principal

r = Rate of interest per month

n = Duration of loan (in months)

Benefits of Using an Online Term Loan Calculator

The term loan calculator formula given above can be used to calculate your monthly liability manually. However, an EMI calculator for term loan available on the Web can easily be used to calculate digitally your loan liability. You simply need to input the key parameters into the EMI calculator for term loan, and in three simple steps, you will get to know the term loan liability for each month.

You can compare the term loan interest rates offered by different FinTech companies, and once you have the details, use the term loan calculator to understand your liability for each month. Also, add the processing fee and other charges that a lender normally asks for, and decide the loan tenure that you are most comfortable with. The term loan calculator provided by a FinTech lender will promptly advise you on the monthly instalment required to be paid, and will provide a fair comparison among different loan products. An EMI calculator for term loan provides a quick means of verifying the actual monthly liability attached to different loan products available for your business need.

Graphical Representation of Loan Parameters Through a Term Loan Calculator

While a key benefit of using an EMI calculator for term loan is that you can quickly compare several loan products at one place, the other benefit is that you can extrapolate loan-related information into graphs, pie charts and diagrams, and visually present them for appraisal by any key stakeholders. You can easily tinker with the various loan parameters and analyse how your loan liability will get impacted each month. By presenting the information graphically, you can promptly get feedback related to a particular loan product from other stakeholders within your business. The loan calculator provides a fair comparison of different loan products, and helps you make the right choice for your business need.

Get to Know the Right Loan Product Through a Term Loan Calculator

By now, you would be appreciative of how an EMI calculator for term loan helps you in comparing the pros and cons of loan liabilities that come attached with different business loans. Another key point to remember is that a term loan calculator lets you juxtapose various competing loan products from different lenders. Therefore, you need not rely solely on the loan advice given by ‘experts’ belonging to different lending institutions. A term loan calculator gives you the power to verify tall claims made by lending institutions, and thereby make an informed choice regarding the loan product that best suits your business need. It is the right tool to sift through the marketing rhetoric to identify the exact cost associated with a small business loan product.

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