How to use Finheal’s EMI calculator to recognize your loan repayment

What is an EMI?rnEMI stands for Equated Monthly Installment which is a set amount of payment a borrower has to make to the lender at a specific date on a monthly basis. EMIs consist of your principal loan amount and interest amount, to be paid every month.rnEven though the EMI remains fixed for every month, the amount paid towards principal and interest changes. The interest component constitutes a main portion of the EMI payment in the initial stages. However, as the loan period progresses and the principal outstanding decrease the portion of interest repayment decreases. This happens until the end of the loan period when the whole loan amount has been paid off.rnHow EMI Calculators WorkrnTo put it rather just, an EMI calculator is a tool that will need you to enter the amount you want to borrow, the duration of the loan, the interest rates and the processing fee and it will do the rest. The basic formula that works following an EMI calculator is:rnE = P x r x (1+r) ^n/ ((1+r) ^n – 1)rnHere:rnE is the amount that you will have to pay every month; basically the EMI.rnP is the amount that you want to borrow.rnr is the rate of interest that is applicable, but calculated on a monthly basis instead of the annual rate of interest. It is obtained by using the formula r = (annual interest/12) x 100.rnn is the duration of the loan in terms of months. So if you select a term of 5 years, n will be 60.rnThis is the mainly essential formula that will be used by the calculator, but there are some that may even include things like the processing fee for the loan, in the calculation of the monthly installment. The processing fee will generally be a certain percentage of the amount being borrowed and can range from 1% to 3% but since it is decided by the bank it can be different for each bank.