Most banks, financial institutions, and other such lenders expect you to repay loans in instalments or equated monthly instalments (EMI). So, it becomes essential to know how much you may need to repay as part of an EMI scheme and incorporate it into your budget.
While you can estimate how much you would spend on your EMIs manually, you would be much better off using a dedicated calculator. You can find many loan EMI calculator online that will help you know how much you may need to pay each month.
However, this isn’t the only benefit these online tools offer; you can do much more with them. So, here are a few other ways EMI calculators can come in handy, but before that, you ought to know the factors that affect the loan repayment process.
Factors Affecting Small Business Loan EMIs
There are many ways to repay small business loans from banks, financial institutions, or lenders. However, the two most common methods include repaying in full or lump sum and as instalments or EMIs. As for the latter, though, several factors may influence the instalments and how you pay them, but three are of prime importance, including:
1. The Principal Amount
The principal amount you borrow from banks, financial institutions, or other such lenders can profoundly affect your EMIs. It is one of the main deciding factors that help lenders set the EMIs. Though the equation is simple, and the EMIs depend directly on the amount borrowed, the loan tenure also plays a prominent role here.
2. Interest Rates
Interest rates are another vital factor that decides the EMIs. However, the only difference here is that the interest rates are in your control to a large extent. So, you can decide on the lender depending on the interest rates offered. However, other factors may influence these decisions, including your financial stance.
3. Loan Tenure
The loan tenure, or the time that the lender allows so that you can repay all that you borrowed, is another critical factor in deciding the EMIs. However, the instalments you may need to pay every month vary inversely, as per the loan tenure, compared to the principal amount directly.
Advantages of Using a Business Loan EMI Calculator
So, you now know that the EMI you will need to pay as part of the loan repayment process depends on three vital factors: the principal amount, interest rate, and the loan tenure. Moreover, these factors also help you estimate how much you pay.
As suggested earlier, you can calculate your EMIs manually using this information, or you could also use one of those handy online calculators explicitly designed for the purpose. Using an online EMI calculator can be beneficial in many ways, including:
1. Saves Time and Improves Efficiency
As you know, manual calculations are always error-prone and cumbersome. So, using an online calculator to estimate your EMIs saves you time and helps improve the estimates’ accuracy and efficiency.
Moreover, you can also get instant results and store them away for safekeeping in case you may need them again.
2. Shows Details of the Loan Availed and Its Schedule
Most online EMI calculators these days, especially those present on the websites of reputed lenders, also give information about the loans availed, their interest rates, and repayment schedules. So, you can get relevant details about your loans and use them to estimate your EMIs, without needing to refer to other sources.
3. Helps Better Manage Your Finances
While an online EMI calculator gives you vital information about your loans and helps save time in estimating your EMIs, the most significant advantage of using them is that you can plan your budget, and distribute funds, accordingly. You can plan your monthly expenses since you already know your EMI.
4. Compare Lenders
An online EMI calculator lets you compare different lenders and helps you get the best, depending on your preferences and requirements. So, you can compare the EMIs of different lenders, not to mention other essential aspects, such as the loan tenure or interest rates, and find a lender that matches your needs.
A Final Note on Using Business Loan EMI Calculators
You may need to borrow money from different lenders such as banks on different occasions or purposes. However, knowing vital aspects, such as interest rates, tenures, and, more importantly, the EMIs, by comparing different lenders before doing so, can go a long way in getting the best lender, depending on your needs.
So, don’t forget to use an online EMI calculator, preferably one that you can find on a reputed lender’s website or from who you are about to avail the loan, to know how much you may need to pay as part of the repayment process.