Why Should You Use an EMI Calculator Before Applying for a Business Loan

With rapidly changing markets, consumer preferences and technology penetration, it’s important to come up with and carry out plans for the growth and expansion of your business. The business that doesn’t grow and adapt with the changing times, isn’t likely to thrive.

While a business loan can help you up your game and execute your plans, it’s critical to use an EMI calculator before you apply for one.

EMI and its implications

After your business finance gets approved, then comes the part of repaying it back along with the interest. The monthly payments needed to be made consisting of a part of the principal and a part of the interest are called Equated Monthly Installment (EMI).

The EMI amount is a pre-determined amount that usually remains constant over the tenor of the loan. It can either be paid by way of auto-debit instruction with the help of your bank or by way of a borrower’s cheque that you need to make sure to pay every month.

Knowing the EMI amount before you apply for the loan is essential for effective financial planning and budgeting. It will enable you to plan for other business expenses accordingly and will also ensure that you keep a monthly reserve for the EMI in order to never miss or default on a payment.

Factors that determine EMI

The following three factors determine your EMI:

• Loan amount

The total amount of loan you have borrowed forms the base of calculating the EMI. It’s on this amount that the interest is calculated for the purpose of the EMI.

However, with the Flexi Loan feature offered by Bajaj Finserv, you can save up to 45% of your EMI payments. This is because interest will be charged only on the amount withdrawn and not on the amount of loan sanctioned. Therefore, business loans with the Flexi Loan facility from Bajaj Finserv make for a smart financing option.

• Interest rate

Business loan interest rates tend to be on the higher end simply because they are unsecured loans and offer the advantage of not requiring any collateral or guarantor to avail the loan.

• Loan tenor

The tenor of the loan is the time period for which the loan has been sanctioned. It’s the final component which goes into determining your EMI. It is also the time period for which you have to pay EMIs.

EMI calculators

The EMI is calculated as:

 P*r*(1+r)n / (1+r)(n-1), wherein P is the principal or amount borrowed, r is the rate of interest, and n is the number of installments.

Don’t be put off by how complicated it may seem. Now, with the help of online EMI calculators you are rid of the headache of manual math.

With the help of the Bajaj Finserv Business Loan EMI Calculator you can instantly determine the amount you will have to pay every month. Your EMI amount is directly proportional to the amount of loan and the interest rate. However, it is inversely proportional to the loan tenor.

Hence, the longer the tenor, the lower is your EMI payment. However, that would increase your overall interest payment. Bajaj Finserv offers business loans of up to Rs.30 lakhs with flexible tenor options to suit your repayment capacity.

Bajaj Finserv also offers pre-approved business loans, which make the process of financing even easier and quicker. Simply fill out a few details to check your pre-approved offer.