What are the factors involved in determining the rate of applicable interest?

Though the interest rate varies across banks and NBFCs, other influential factors exist. Loan amount: Generally, higher loan amounts have lower interests. Simultaneously, if borrowers offer a huge down payment, the applicable interest rate levied can be quite low. CIBIL score: Better the CIBIL score of a business and/or its owner, the more favourable the interest rate. Age of business: Established and reputed businesses attract a better interest rate of interest as lenders can be sure of timely repayment and lower chances of default. Balance sheet: An audited balance sheet showcasing a healthy balance between assets and liabilities, as well as clear information about shareholder equities, is another critical deciding factor.

Term Loan EMI Calculator

When borrowed at the right time & with enough foresight, a business loan may become just what a business needs to spread its wings. The need for funding is generally the same for all businesses though the amount and the nature of the loan product may vary according to the nature, scale, and size of the business and the purpose of the loan.

Businesses need to possess strong financials and showcase the substantial potential to avail of any major business loan scheme. However, thoughtful planning, farsightedness, and a drive to succeed are must because debts must be repaid. At the same time, profitability, market presence, strong revenue generation, and asset possessions are crucial aspects of loan eligibility.

Term loans are popular across numerous business sectors. The loan amount is disbursed as a lump sum to businesses that can avail them according to certain terms. The loan terms define a certain repayment schedule during which a business must repay the principal and interest amounts. Interest rates, principal amount, and the loan term or repayment schedule are together used to calculate the EMI. EMI stands for equated monthly instalments, which are monthly payments that club the business loan amount & the total interest accrued throughout the loan tenure.

An online term loan EMI calculator offers a fast and simple way to determine the loan EMI.

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What is a Term Loan EMI Calculator?

A term loan EMI calculator is an online tool that can instantly calculate EMIs. All anyone needs to do is enter the term loan amount, the loan tenor, and the rate of interest and the calculator will display an accurate value instantaneously.

Purpose of Term Loan EMI Calculator

The purpose of a term loan EMI calculator is to determine the equated monthly instalment and showcase the entire repayment schedule in the case of certain calculators. EMI calculators are fast and accurate & calculate for a wide range of inputs. Calculating EMI becomes a cakewalk with an online loan EMI calculator.

Advanced calculators, like the one at Yubi, provide graphical representations ( such as bar charts & linear graphs) and/or a repayment table that breakdown the entire repayment process.

Features of EMI Calculator

Yubi’s term loan EMI calculator offers certain unique features that only a few others offer.

Graphical Representations: Graphs can display a lot of information, such as the ratio of the principal amount repaid to the amount of interest paid back. Linear graphs can also indicate the rate at which the total amount repayable decreases with time.
Repayment Table: Repayment tables offer a complete breakdown of the repayment structure. The monthly breakdown of the principal, interest, total amount to be paid, and the remaining balance is displayed. The repayment table is a handy data visualisation tool that can help one chalk out their finances accordingly.

The Elements of a Repayment Table are:

Principal Paid: This is the portion of the EMI amount dedicated to the principal loan amount. As you keep on paying EMIs, the portion of the principal paid will keep increasing with respect to the interest being paid.
Interest Paid: The portion of the loan EMI related to the loan interest calculated keeps decreasing as more and more EMIs are paid.
Total Payment: The sum of the principal and the total interest payable.
Outstanding Loan Balance: The remaining balance of the term loan or the principal amount borrowers still owe to their lender.

How does a Term Loan EMI Calculator work?

Term loan EMI calculators are mini marvels of software technology. They are generally written in HTML/CSS/JavaScript and run using the client machine’s resources rather than server-side resources. All the code is embedded in the front end itself. So, when using any online loan calculator, you will always receive instant results as they rarely face downtime.

The three key inputs of a loan calculator, the loan amount or principal, interest rate, and tenure, affect how much EMI businesses need to pay for their term loans. As mentioned, any term loan EMI is determined using both the loan value and the total interest. The total interest payable plus the term loan value is divided by the tenure to obtain a monthly instalment value that’s easily repayable.

A term loan EMI calculator uses the general EMI formula for calculating instalments, similar to a personal loan or home loan EMI calculator.

Calculate Term Loan EMI

The formula for calculating the EMI amount is written using JavaScript, and the JS code takes in three user inputs, as is the norm. Here’s the formula for calculating EMI that all online calculators use:

Where E is the EMI, P is the principal, r is the rate of interest (calculated monthly), and n is the loan tenure in months. The monthly interest rate is obtained by dividing the per annum rate by 12.

As may be evident from the above formula, the higher the term loan borrowed and higher the interest rates, the higher the value of the EMI to be paid by the borrower. However, longer tenures can bring down the total amount of money paid by a borrower.

FAQs

Foreclosure charges, also known as a prepayment penalties, are levied by lenders if a borrower repays the amount borrowed before the total loan tenure. They do so to make up for the interest they lose out on due to early repayment.

Foreclosure charges vary from one lender to another. However, some banks may not charge anything.

Yubi offers a unified platform for point-to-point onboarding between borrowers and lenders. Businesses can communicate seamlessly and manage everything optimally with fast approvals and swift processing guaranteed every single time.

Though the interest rate varies across banks and NBFCs, other influential factors exist.

Loan Amount: Generally, higher loan amounts have lower interests. Simultaneously, if borrowers offer a huge down payment, the applicable interest rate levied can be quite low.
CIBIL Score: Better the CIBIL score of a business and/or its owner, the more favourable the interest rate.
Age of Business: Established and reputed businesses attract a better interest rate of interest as lenders can be sure of timely repayment and lower chances of default.
Balance Sheet: An audited balance sheet showcasing a healthy balance between assets and liabilities, as well as clear information about shareholder equities, is another critical deciding factor.

There are NO hidden charges for availing of any term loan facility from a lender through Yubi. All transactions, communications, and processes occur with utmost transparency.

You may, but your lender may levy a foreclosure charge or prepayment penalty. In certain cases, you may have to pay a certain number of EMIs before availing of the prepayment option. Consult with your lender before deciding.

A penalty of a certain percentage is charged on the EMI amount. Furthermore, failed payments may adversely affect a business’s credit score and history, jeopardising the chances of securing any loan in the future.

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