On This Page, You can easily know about How To Calculate An Installment Loan Payment.
An installment payment, such as that paid monthly on a loan, is paid out to the lender with interest charges and finance fees also included. Typically, monthly installment loans are for larger purchases like appliances, cars, or other large asset purchases. The payments are calculated using the Equal Monthly Installment (EMI) method. It is simple to apply and you can use online calculators, a spreadsheet program such as Excel, or do it by hand.
What is an EMI?
A loan is a financial agreement between two parties, a lender and a borrower. Under this agreement, the lender gives a specific amount of money to the borrower with the intent that the amount borrowed is paid back with interest as monthly installments over a predetermined period of time by the borrower. Using an EMI calculator is the easiest way to determine your monthly payouts and balance your budget accordingly. Everyone has to borrow a loan at some point in time in their life whether for buying a car or a house, funding their child’s education or consolidating debts, etc. Thus, loans have become an important part of everyone’s life in today’s times. Loans can be availed for various purposes, but the key components on loans are always the same, namely – loan amount, loan tenure and interest rates.
What is a Loan EMI Calculator?
EMI is the payment which the borrower makes every month towards loan repayment of the loan. EMI constitutes the principal amount along with the accrued interest. You can use the EMI calculator to calculate your monthly loan EMI payouts. The borrower just needs to enter the variables of the loan such as the principal amount, tenure and interest rate and it instantly fetches an result which is the EMI. Calculating EMI using the online EMI calculator is easy and you get to know your loan EMI in seconds. Paisabazaar’s online loan EMI calculators are available 24*7 without any cost! So calculate or compare various loan EMIs any number of times you wish to, for free.
Calculating the Payment by Hand
Understand what that number means. In this example, the formula resulted in a payment of $109.66. That means you would make 36 equal payments of $109.66 for a loan of $3,500 at an 8% interest rate based on our example. Try changing some numbers in order to understand the impact of different interest rates or term length of the loan on the monthly payment amount.
Identify your loan information. This is part of any method used to calculate a payment for an installment loan. You will need to know the total amount financed or principal, the number of payments and the interest rate. Write these down or enter them into cells in Excel to use later.
Finding an Online Calculator
Locate the required information. Each one works a bit differently, but they will all ask for the same information. The interest rate, loan amount and number of payments are listed in the loan documents.
If you are estimating payments for a loan you are considering, many of the sites also include probable interest rates for that type of loan.
- The calculators and formulas can also work in reverse. This is useful to figure out how large of a loan you can afford on a monthly budget. In these cases you enter the desired payment amount, interest rate and number of monthly payments you would make, and it would tell you the loan amount.
- When comparing loans, it is best to look at what the APR rate is rather than the interest rate. The APR rate will roll in any loan fees and that is the true rate of interest.