Loan Tenure2 Months

Total Interest₹ 10,000

Total Payment₹ 20,000

When a bank or NBFC provides you with a loan, you need to repay the loan along with interest incurred over the loan tenure and various one-time costs associated with borrowing. As it is difficult to make a lump sum payment, borrowers have the option of paying back the loan in equated monthly instalments, popularly known as EMI, over a pre-agreed loan tenure. Over a sufficient loan tenure, you can enjoy the benefits of easy, comfortable and stress-free repayment. The repayment tenure affects the monthly instalments and the cost of the credit (total interest) payable.

A loan tenure calculator helps you find out how long will it take or the number of EMIs required to repay your loan based on the principal amount, interest rate applicable and monthly instalment you can afford to pay. Moreover, if you are planning to make a part pre-payment on an existing loan, you can estimate the remaining tenure for your loan using a loan tenure calculator.

Here are the components of a loan tenure:

A principal loan amount is an amount that a bank or NBFC offers to a borrower. The range of a loan amount varies from lender to lender.

Equated monthly instalments, popularly known as EMI, is the amount that a borrower needs to pay every month to the lender over the agreed loan tenure.

An interest rate is the cost of the loan charged by a lender to a borrower for the use of money. The interest rate is expressed as a percentage of the principal per period.

A loan tenure calculator is a tool that takes inputs like the amount you want to borrow, the interest rate, monthly EMI to calculate a period of time for which you can get a loan. You can calculate the loan tenure using the following EMI formula. E = P * r * (1+r)^n/((1+r)^n – 1) Here:,

- E refers to the instalment you will have to pay every month i.e. the EMI.
- P refers to the amount that you want to borrow.
- r refers to the rate of interest applicable but calculated on a monthly basis instead of the annual rate of interest.
- n refers to the duration of the loan in months. If you choose a term of 4 years, n will be 48.

However, it is important to understand that other than interest rates, lenders charge several types of fees, including processing fee, documentation charges, associated with borrowing. The processing fee is generally a certain percentage of the amount being borrowed, typically from 1% to 3%.

Some of the main benefits of using the loan tenure calculator are as under:

- It computes the tenure in seconds
- It helps you find out how long will it take to repay your loan
- Makes a complicated calculation to figure out the loan tenure for a different combination of EMIs, principal amount and rates easy

Note: Interest rates are indicative in nature and loan tenures have been rounded off.

**Ans)** The result will be the same if you program the calculator in excel. Whereas, a calculator is a ready to use tool that provides immediate result once you type the components. Such programming in excel can be a little tedious and complicated.

**Ans)** Banks have only EMI calculator on their websites, but if you want to use a loan tenure calculator, it is available only on Afinoz.com.

**Ans)** Loan tenure calculator can help you figure out, in seconds, how long will it take to repay your loan. It is fast and very easy to use and can carry out multiple calculations in minutes. Moreover, it does away with the possibility of errors in calculations, provided you type accurate inputs.

**Ans)** Assuming that the bank will approve the loan at the same interest rate and how much you can pay per month, the exact loan tenure may differ slightly since the tenure displayed by the loan tenure is rounded off.

**Ans)** The bank will charge a late payment fee if you don’t make a payment on time or miss an EMI. A missed or delayed EMI payment will affect your credit score. Your credit score may suffer if you miss a payment or don’t pay the loan on time.

**Ans)** The process of calculating EMI is very simple. Enter the loan amount, loan tenure, and interest rate into the business loan EMI calculator and click on ‘calculate’. You will get the figures as follows - your monthly loan EMI is Rs.17,493; total interest payable Rs. 2,49,630; total amount payable Rs. 10,49,630.

**Ans)** Yes, if you make a pre-payment on a business loan and your EMI remains the same, the loan tenure will be reduced.

**Ans)** You need to enter the loan amount, the interest rate and the EMI into the loan tenure calculator available on Afinoz.com. The result you will get is as follows: Loan tenure around 51 months; total interest payable would be around Rs. 1,10,000; and the total amount payable around Rs. 5,10,000. Since the tenure has been rounded off, the figures may differ a little bit. look out for seasonal offers, employment history, the credibility of the employer, and others.

**Ans)** Calculating the EMI before applying for a loan can help you arrive at a suitable loan amount and loan tenure. Based on the EMI calculation, you can ensure if the EMI fits into your monthly budget within your repayment capacity. It helps you calculate your monthly outgo and plan your finance with ease.

**Ans)** Pre-closing a loan has its pros and cons. While preclosing loans can help you save a lot on the interest rate and get freedom from debt, the pre-closing loan will not help you improve your credit score. Hence, opt to prepay a part of your loan and reduce the loan tenure to save up on interest payments. Some lenders levy prepayment charge while others don’t.