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# How an EMI calculator can save you from loan cheats?

Why EMI calculator is the best tool for Personal Loan?

When we or any of our friends or family takes a Loan, the first question that comes to our mind is “How to calculate the EMI?” As far as banks are concerned they will tell you the EMI but not how it is calculated until and unless asked.

EMI includes three variables:

• Principle amount.

• Rate of interest.

• Number of years.

EMI: It is an abbreviation for Equated Monthly Instalment. So, EMI is monthly instalments that we make towards our loan that includes payment towards both Principle and Rate of Interest.

Formula for EMI calculation is:

EMI = (P * i) (1+ i)n / (1+i)n – 1

Where,

‘P’ is the Loan Amount

‘i’ is the Monthly Interest

‘n’ is the Tenure of Loan

This manual calculation is quite confusing and time consuming. Moreover, if you have taken a long term loan then it is very difficult to calculate the EMI every month.

The easiest way to calculate the EMI is through the EMI calculator online.

At http://octopusloan.com/, we have an EMI calculator that makes calculating of your EMI very easy for all kinds of Loans.

Here in the online EMI calculator, to calculate the EMI you just have to enter Loan Amount, Rate of Interest and number of months. Once you are done with finishing these details, you will be given an amortization table which will give you break up of your Loan amount with Beginning Balance, EMI, Principal, Interest, and Ending Balance.

So you will get all the details about your Loan balance anytime.

While calculating EMI one thing we would notice is, though the EMI payment remains constant, the rate of interest and the principle amount keeps varying. Initially the interest rate charged will be more but gradually it will decrease with each payment. There is a pie chart that shows the percentage of total amount versus interest rate. From the table, you can see that initially large part of your payment goes towards the interest, but later large portion goes towards the principal amount.

Conclusion:

Manually calculating EMI will not work every time. We have to rely on automatic EMI calculator. Sometimes you get stuck and get confused with the formulae. Hence, it is highly recommended to follow an easy route of a simple interest EMI calculator, available online without any charges. You need not download it nor view it in an excel sheet. It gives you an easy table with all the details about your loan.