How to plan EMIs effectively with education loan calculators

As education costs in India have risen rapidly over the last couple of years, universities and educational institutes have introduced various loan options to help students deal with these costs. The interest rates on education loans in India start from 6.75 percent while tenures extend upto 15 years

Education loans in India cover all expenses related to the course being pursued by students. They include tuition fees, library and laboratory fees, travel expenses, and exam fees. The equated monthly instalments (EMIs) on these loans are calculated either manually or through the education loan calculator.

Benefits of using an education loan calculator

An education loan calculator enables applicants to calculate their loan EMIs for a specific tenure and interest rate in just a few seconds. These calculations are made using four retrievable quantities. Applicants can also use these calculators to find a perfect loan option offering the best combination of interest rate and repayment tenure. They are available online free of cost for users.

How to use an education loan calculator

To use an education loan calculator to calculate EMIs, users need to enter the details regarding their loan amount, tenure, interest rate, and processing fees. The loan amount is the money borrowed by the applicant from the financial institution. The interest rate is the percentage charged by the lender on the loan amount while tenure includes the duration in which the loans need to be repaid along with the due interest.

The education loan calculator calculates the EMI payable on an education loan, based on these details. It uses the following mathematical formula for the purpose:

EMI = [P x R x (1+R)^N]/[(1+R)^N-1].

The ‘P’ in this formula stands for the principal loan amount, the ‘ R’ denotes the rate of interest payable per month and ‘N’ shows the number of monthly instalments.

To get an estimate of their equated monthly instalment, users need to calculate all these values. This will provide them with other crucial details such as the total interest payable, and a detailed amortization table breaking down their EMIs into principal and interest amounts on a monthly and yearly basis.

Multiple advantages of education loan calculators

Besides calculating the EMIs, education loan calculators can also be used to make an accurate estimate of the applicant’s eligibility to apply for a specific loan amount. This enables users to apply for the correct loan amount, thereby reducing the chance of their applications getting rejected. Users can also make streamlined burrowing decisions with these calculators, smoothing their overall experience.

Users can also use calculators to estimate the exact loan amount required by students for the entire duration of their study courses. This will help them sync the loan amount with their requirement. Another effective tool includes the repayment calculator that provides students with an accurate estimate of their savings based on the loan amount they wish to prepay.

Education loan calculators enable students to make smart financial decisions and ensure a smooth repayment of their loans. Every student should use an education loan calculator before and after applying for an education loan.