Education loan EMI calculator
What is Education Loan EMI Calculator ?
Planning to study abroad and take on an education loan for your foreign dreams? Then, you need to study the Education Loan EMI Calculator. An Education Loan EMI Calculator is a powerful tool that helps students and parents estimate the monthly payment (EMI) they’d have to pay on their education loan. The calculator considers the following:
- Loan amount: The total sum you borrow for your education.
- Interest rate: The rate the bank charges on the loan amount.
- Loan tenure: The total duration (in months or years) for which you repay the loan.
Imagine you are planning to study abroad, and your total cost of attendance is estimated to be around ₹40 lakhs for the entire course of study. Your interest rate is 10.45%, and your tenure for repayment is set as 10 years. Here’s a breakdown of the calculation:
Loan amount (P) = ₹40,00,000
Interest rate (R) = 10.45% per year = 10.45 / 100 / 12 = 0.00870833 per month (converted to decimal)
Loan tenure (T) = 10 years = 10 * 12 = 120 months
Your EMI for a loan of ₹40 lakhs at 10.45% interest for 10 years would be approximately ₹53,862.07 per month
What are benefits of using an Education Loan EMI Calculator ?
- Easy to Use: It saves you time and effort compared to manually calculating your EMIs with complex formulas.
- Financial Planning: By estimating your EMIs, you can create a realistic budget that factors in your loan repayments. This allows you to plan your finances effectively and avoid any surprises down the road.
- Decision Making: The education loan EMI calculator helps you compare loan options from different lenders. By seeing the estimated EMI for each option, you can choose the loan that best fits your financial situation. This can potentially save you money in the long run by opting for a loan with a lower EMI.
- Affordability: The EMI calculator clearly shows the monthly payment you’ll be responsible for. This helps you assess whether the loan amount is affordable based on your income and other financial commitments.
- EMI Payment Breakdown: Some calculators estimate the total amount you’ll repay over the loan tenure, including both the principal amount and the interest. This helps you understand the true cost of borrowing and make informed decisions.
- Transparency: The calculator can show you an amortization schedule, which details how much each EMI payment goes towards interest and principal over time. This transparency allows you to see how the loan progresses and how much of your payment contributes to actually reducing the loan amount.
What is an EMI?
EMI stands for Equated Monthly Installment. It’s a fixed payment you pay towards your loan every month. This payment covers the principal amount (the actual money you borrowed) and the interest charged on the loan. Education loan EMIs are directly impacted by the interest rate of your education loan. The bank will offer you a complete breakdown of your EMI repayment plan once your loan is sanctioned and ready to disburse. Another way to find out how much your EMI is or how it will be is through EMI calculators. These calculators are designed to simplify budgeting to know exactly how much you must pay each month throughout the loan tenure.
Popular Calculators
Factors Affecting Your Education Loan EMI
There are three main factors that influence the EMI amount on your education loan:
- Loan Amount: The larger the sum you borrow, the higher your EMI will be. This is because you’re spreading a bigger principal amount over the loan tenure.
- Interest Rate: The interest rate is the cost you pay for borrowing the money. A higher interest rate translates to a higher EMI. Conversely, a lower interest rate results in a lower EMI.
- Loan Tenure: The loan tenure refers to the total duration (months or years) you repay the loan. A shorter tenure means higher EMIs as you repay the loan in a shorter period. Conversely, a longer tenure leads to lower EMIs, which means you’ll pay more interest overall.
Here’s an example:
Imagine two loan options for ₹4 lakhs each:
- Option 1: Interest rate – 10%, Tenure – 5 years (60 months)
- Option 2: Interest rate – 8%, Tenure – 7 years (84 months)
Option 1 will likely have a higher EMI due to the shorter tenure, even though the interest rate is slightly higher in Option 2. However, the total interest paid over the loan term will likely be lower in Option 1 because of the shorter repayment period.
How to use EduFund’s Education Loan EMI Calculator?
The education loan EMI calculator is a game-changer. It is user-friendly, free of charge, and helps you budget your future all at once. Here’s a breakdown of how to use one effectively:
- Loan Amount: Enter the total amount of money you plan to borrow for your education.
- Interest Rate: Enter the interest rate offered by the lender (as a percentage). You might need to estimate this if you haven’t finalized a loan yet.
- Loan Tenure: Enter the total duration (in years or months) for which you want to repay the loan.
- Calculate: Click the “Calculate” button or similar option.
Understanding the Output
- The Final EMI Amount: This is the estimated monthly payment you’ll make toward your loan. It includes both principal and interest.
- Total Principal Amount Payable: The calculator shows the principal you must repay to the lender upon borrowing.
- Total Interest Paid: The calculator will show the total amount of interest you’ll pay over the entire loan tenure.
How to calculate the education Loan EMI?
While education loan EMI calculators are convenient, understanding the formula behind them can empower you further. Here’s a breakdown of the formula and how to use it:
Formula:
EMI = [P * R * (1 + R)¹] / [(1 + R)¹ – 1]
Where:
EMI = Equated Monthly Installment
P = Loan amount (principal)
R = Interest rate per month (converted from annual rate)
T = Loan tenure in months
Example: Let’s consider the scenario you mentioned earlier:
Loan amount (P) = ₹40 lakhs = ₹4,000,000
Interest rate (R) = 10.45% per year = 10.45 / 100 / 12 = 0.00870833 per month (converted to decimal)
Loan tenure (T) = 10 years = 10 * 12 = 120 months
Calculate the EMI:
EMI = [4,000,000 * 0.00870833 * (1 + 0.00870833)^120] / [(1 + 0.00870833)^120 – 1]
EMI ≈ ₹53,862.07
This manually calculated EMI matches the estimate you received from the EMI calculator (around ₹53,862).
Remember:
- The formula uses a monthly interest rate. For accurate calculations, convert the annual rate into a monthly decimal.
- This simplified formula may not account for additional charges levied by some lenders.
- By understanding the formula and applying it to your specific loan scenario, you can make informed decisions and effectively manage your education loan repayments.
Why is the formula relevant?
Understanding the formula gives you a deeper understanding of how the three factors (loan amount, interest rate, and tenure) interact to determine your EMI. You can:
- Make informed choices: Play around with the variables in the formula to see how loan amount, interest rate, or tenure changes impact your EMI. This can help you choose a loan option best suits your financial situation.
- Estimation: While calculators are handy, there’s a slight chance of errors. Knowing the formula allows you to verify the EMI estimate provided by the calculator for peace of mind. These numbers are likely to differ from your actual payments. Make sure to read the terms and conditions as well as the final repayment plan given by your lender.
Who can use the Education Loan EMI Calculator?
Education loan EMI calculator can be used by anyone. Ideally, someone who is planning to take an education loan can see it to access their future monthly payments and decide on the loan amount. This calculator will help students and parents decide how much they should take as the principal amount, the impact of their interest and tenure on their payments in the future, and how they can budget for it.
EduFund’s Education Loan Interest Rates
EduFund offers competitive education loan interest rates to help students get affordable education loans for their future. We understand that education loans are a big responsibility, and ensuring that your education loan offers the best terms is our number one priority. Our interest rates start at 9.85%, allowing you to access funding without taking on an excessive financial burden. We help students and parents by negotiating the right loan terms with India’s top education lenders. Our experts provide end-to-end guidance. Here are some perks of getting your education loan through us:
- Competitive interest rates start at 9.85%
- Speedy loan approvals (our personal best is 72 hours)
- Multiple loan offers from top lenders
- 100% financing (Tuition fees + living costs)
- No margin money needed
- Non-collateral education loans up to ₹1 Cr
- Personalised guidance from loan veterans
- Save up to ₹80,000* in processing fees
- Loan approvals without an offer letter
At EduFund, we understand the importance of education and the financial challenges it can pose. We are dedicated to providing you with:
- Streamlined Loan Process : Our user-friendly application process allows you to easily apply for an education loan.
- Flexible Repayment Options: We offer flexible repayment options to fit your needs after graduation.
- Expert Guidance: Our experienced team is here to guide you through every step of the process, from application to repayment
Frequently Asked Questions
How does an education loan EMI calculator help?
An education loan EMI calculator helps you estimate the monthly payment (EMI) you’d make on a potential education loan. It considers factors like the loan amount, interest rate, and repayment tenure. This helps you:
- Budget effectively: Understand the financial commitment involved in taking an education loan.
- Compare lenders: See how EMI varies between lenders offering different interest rates.
- Plan your finances: Estimate how much you’ll need to pay monthly after your studies.
How accurate is an education loan EMI calculator?
Education loan EMI calculators are quite accurate, but they provide an estimate. The actual EMI might differ slightly due to:
Processing fees: Some lenders charge a one-time processing fee, which isn’t factored into the EMI calculation.
Additional charges: There might be other charges like prepayment penalties or late fees, which aren’t included.
What is the EMI for a ₹10 lakhs education loan?
You can use the above calculator to find the answer. You will also need to fill out the rest of the inputs, such as tenure and interest rate to get an accurate estimate for your education loan.
How does the interest rate impact my EMI?
The interest rate is a major factor influencing your EMI. A higher interest rate leads to a higher EMI and vice versa. This is because a larger portion of your monthly payment goes towards interest with a higher rate.
What happens if I miss an EMI payment?
Missing an EMI payment can negatively impact your credit score and finances. Here’s what might happen:
Late fees: Lenders typically charge late fees for missed payments.
Increased interest: You might be charged a higher interest rate on the overdue amount.
Damaged credit score: Missed payments can significantly damage your credit score, making it difficult to secure loans in the future.
Can I extend the loan tenure to reduce my EMI?
Yes, extending the loan tenure lowers your EMI but increases the total interest paid over time. It’s a trade-off between affordability and total loan cost.
Does paying a larger down payment affect my EMI?
Absolutely! Making a larger down payment reduces the overall loan amount, leading to a lower EMI. This can significantly save you money on interest payments in the long run.
What are some ways to reduce my education loan EMI burden?
- Explore scholarship opportunities to reduce the loan amount.
- Consider part-time work during your studies or loan repayment period.
- Look for lenders offering lower interest rates or benefits like interest waivers during the study period.
- Explore government schemes or education loan refinancing options for potentially better rates.
What documents do I typically need to use an education loan EMI calculator?
Most calculators require only basic information like the desired loan amount, repayment tenure, and interest rate (if known). You don’t need any documents to use them.
