Education loans have been a boon to students willing to pursue higher studies overseas. Lenders in India offer various education loan schemes catering to the needs of students, and the fact that these are high-value loans available at affordable interest rates make them all the more desirable to borrowers. However, when estimating the monthly payable EMIs, it is a good idea to make use of an education loan calculator so you know how to budget and keep aside from monthly expenses.
EMI or Equated Monthly Instalment is a fixed payment made every month by the borrower to the lender. This applies to both the principal and the interest, so the whole amount is paid off over a few years. EMIs are a convenient way to repay the loan comfortably at regular intervals. Thus, borrowers who are unable to pay a lump sum at once, can opt for such easy EMIs. However, before we get to the calculation part, let’s have a look at the various factors that determine your EMIs.
Benefits of Using Education Loan calculator
There are multiple benefits of using an education loan emi calculator. These include the following:
- Ease of accessibility – An online calculator can easily be accessed anytime from any part of the country. It is also easily accessible on your smartphone provided you have good connectivity.
- Accuracy of results – When you calculate manually, there’s always a chance of miscalculation or error. However, with an online tool, you can rest assured that the results are accurate. Thus, you can rule out mistakes.
- Easy to use – The online tool is extremely user-friendly as the steps are easy to comprehend. Moreover, you get to avoid complex and tedious calculations.
- Helps in budgeting – The EMI calculator can assist you in planning your monthly instalments. You can set the loan parameters as many times as you want to fix a budget or an amount that you will be comfortable paying every month.
How to Calculate Your Study Loan EMIs
When taking an education loan for abroad studies, you can get an estimate of your study loan EMIs by simply visiting your lender’s website, accessing the online calculator, and following these steps:
- Enter the desired loan amount
- Select the rate of interest
- Pick a tenor as per your convenience
Once you have entered all your details, click on the ‘Calculate EMI’ option to get instant results.
The online tool acts upon the following mathematical formula to evaluate the EMI:
EMI = P × r × (1 + r)n/((1 + r)n – 1)
P denotes the Principle
R stands for Rate of Interest, and
N is equivalent to the tenor of loan repayment
Factors Determining Education Loan EMIs
Your loan EMI is determined taking three factors into account, which are as follows:
- Loan or Principal Amount – This refers to the borrowed amount. The higher the principal, the higher will be your monthly instalments.
- Rate of Interest – This refers to the amount charged on the principal by the lender. So, before choosing the loan amount, compare different interest rates offered by the lender.
- Repayment Tenor- This refers to a fixed period within which the borrower has to repay the entire loan amount.
It is important that you choose the above prudently so as to avoid a hefty EMI every month. Also, take into account your monthly salary and expenses to ensure that you are in a good position to avoid any payment defaults.
An education loan calculator can help you have an idea about your loan expenses and the payable amount depending on the borrower’s financial stability and income. Also, it is free of cost, so there are no additional charges to be paid on its usage. Remember that with prepayment options and floating rate of interest on EMI, the payable amount is determined based on the various factors pertaining to the loan taken. For further assistance and clarity on policy terms, feel free to reach out to your lender.
Also Read: What are the Requirements to Study Abroad?