There are times your business needs additional funds to expand operations, hire more staff, or buy new equipment. While you can use hard-earned savings or liquidate valuable assets to finance these investments, a Business Loan presents a more viable option.
First of all, a Business Loan is a big commitment, and it is essential you get all the facts right and clear before your company signs the dotted line. With an EMI calculator, a company can see how different loan amounts and interest rates affect their monthly payments.
This is important because a loan with a very high rate of interest will cost more money than is worth it, even if a company gets approval for a more significant loan amount.
A Business Loan EMI Calculator helps companies choose a specific lender according to their requirements and the cost of borrowing: it essentially determines whether it makes sense to borrow the amount at a certain rate of interest, and also helps compare it to other types of loans and ramifications.
What is a Business Loan EMI calculator?
If people take out a Business Loan online in India, they must pay Equated Monthly Instalments (EMIs)- the payments made towards the loan’s principal amount.
Business Loan EMI calculators are widely available free of charge across websites of leading financial institutions like Poonawalla Fincorp to help consumers calculate how much they need to pay back monthly based on different interest rates, tenure options and the loan amount.
When a person sees it in front of them clearly and concisely, it is easier to make the right choice.
How does an EMI calculator for a Business Loan work?
The functioning of an EMI calculator is based on a defined formula that considers various characteristics (loan amount, tenure, and interest rate).
People may easily calculate the EMI payments by entering the needed values into the following formula:
EMI = P x R x [(1+R) ^N]/ [(1+R)^N-1],
Here, P is the principal amount you want to borrow, R is the interest rate on a Business Loan, and N is the tenure, i.e., how long you plan to keep paying back the loan over time.
Individuals can calculate the EMIs using three methods: online EMI calculators, using excel or doing manual calculations.
Of all the three options, an online calculator is the most convenient one.
How can I use an EMI calculator for a Business Loan?
New-age NBFCs like Poonawalla Fincorp provide EMI calculators for Business Loans to assist borrowers in better planning their loans. You can use it to compute the EMI on your Business Loan, the total interest outgo, and view the amortisation schedule for a more in-depth understanding of payments.
To calculate the EMI, follow the below steps:
- Enter the loan amount to borrow.
- Now, fill in the interest rate offered.
- Enter the loan duration in the ‘Tenure’ area.
The calculator will then furnish the results, revealing the EMIs and overall cost of borrowing to the borrower. These values can then be compared to other loan offers.
What factors influence the EMI on a Business Loan?
The factors that affect the Business Loan EMI are:
1. Loan Amount:
The first factor affecting a Business Loan’s EMI is the money borrowed. If the amount of money borrowed is higher, then the monthly EMIs would increase due to additional finance charges.
Secondly, tenures play a significant role in deciding the EMI. Longer tenures mean lower EMIs, whereas shorter terms result in higher EMIs. This is because when the tenure becomes longer, the interest rates charged get reduced.
Interest rates play a significant role in determining how much burden the borrower bears while repaying the loan. High-interest loans charge the borrower higher EMIs compared to low-interest loans.
Entrepreneurs must only opt for a Business Loan online in India on favourable terms because loans are meant to help, and not hinder the progress of any business. Make sure you make an informed decision and choose a reputable lender who will ensure you avail yourself of credit on transparent and relevant terms. Remember to use the EMI calculator when planning the payback efficiently.
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