Whenever a business loan is taken to increase business or if a person is taken a loan for work so the amount taken as a loan has to be repaid within a certain time frame. Every month some part of the amount is paid to repay the loan amount, this is called EMI. The EMI of the loan is calculated with the **EMI calculator**.

EMI is a facility for those who require a large amount of money for their work. It is not possible to repay a large amount at once. In such a situation, the EMI of such an amount is made to repay the loan amount.

Who decides EMI? The answer to this is – whatever the monthly EMI is made, the lending institution and the person taking the loan decide it by mutual agreement. However, it depends on the total amount of the loan and the time fixed for repayment. A credit score also plays an important role in deciding EMIs.

EMI has many benefits, due to which the loan can be repaid on time. With this, the lending company gets its money interest in real-time and the businessman’s work is also done. What is EMI and how is EMI calculated? Let’s understand this:

## What Is EMI?

EMI can be known as Equated Monthly Installments. It is a fixed amount, which is paid by you to the bank on a fixed date every month. It is not as if a sum of money is deposited into a similar bank or company. When a person takes a loan from a bank or any lending company, this EMI is paid to repay that loan.

Since the loan is taken as a large amount of money. It is not possible to repay it in one go, then to repay it, there is a facility to repay it as EMI from the bank and loan company. A fixed date is set in the month to repay the EMI amount. EMI has to be paid on the same date.

#### Also Read: How Can Pre-EMI Calculator Effect Factors For Loan?

## EMI Also Includes Interest

Whenever a loan is given from a bank or NBFC company, interest is also applied on that loan. When the monthly EMI is deposited to repay the loan, the interest rate is also included in it. To put it simply, when the loan installment is deposited, it also includes some amount of interest rate.

As the principal amount of the loan decreases, the amount of interest rate also decreases. The important thing in EMI is that the higher the loan amount and the more time it takes to repay the loan, the higher will be the monthly EMI amount. If the loan amount is high and there is less time to repay, then the EMI of the loan is higher for this. Let us understand how EMI is calculated?

#### Also Read: How To Use A Business Loan EMI Calculator?

## How is EMI Calculated?

EMI is calculated by the EMI loan calculator. Through the EMI calculator, the total amount of loan and total repayment time and interest is determined by the base month.

Three things are taken care of while calculating EMI: first loan total amount, second applicable interest rate, and third loan repayment time (tenure of repair). The higher the loan amount and the applicable interest rate, the higher the EMI amount.

On the other hand, the longer the repayment tenure (time to repay the loan), the lower the EMI. EMI calculator can also be used for this. If you wish, you can also calculate the EMI of your loan by visiting ZipLoan’s website. With EMI calculated, you can make a better decision about the loan.

## What is A Loan EMI Calculator?

As mentioned earlier, the EMI calculator is used to calculate EMI. The calculator is used to repay the monthly EMI that the borrower pays every month.

The EMI calculator can be used for a shop loan or any business loan you take from a finance company. Now you can calculate the EMI amount online. This facility has been provided on the website of ZipLoan to help the traders.

## How to Calculate Loan EMI?

The formula for calculating EMI is the following:

*EMI = [P x R x (1 + R) ^ N] / [(1 + R) ^ (N-1)]*

- E = EMI
- P = total amount of loan
- R = interest charged per month
- N = Total time taken for how long the loan has been taken

Let’s consider as an example:

**Business Loan Example for 2 Years:**

Suppose you took a business loan of 1 lakh at an interest rate of 13.50%. The total repayment time for the loan was fixed at 2 years. So you have to deposit 4778 / – as EMI every month. That is, when you deposit the total amount in 2 years it will be 1 lakh 30 thousand rupees.

**Business Loan Example for 3 Years:**

Suppose you took a business loan of 1 lakh at an interest rate of 13.50%. The total repayment time for the loan was fixed at 3 years. So you have to deposit Rs. 3394 / – as EMI every month. That is, the total amount you will deposit in 3 years will be 1 lakh 49 thousand rupees.

## Benefits of EMI Calculator

- You can understand your monthly EMI whenever you want.
- When you go to take a loan, you will get accurate results.
- It helps to do better financial planning.

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