Education Loan EMI Calculator: Purpose, Uses, And Formula
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31 January 2022Mr Singh wants his son to opt for a PGPMAX course from the Indian School of Business, and it will cost him around Rs. 40 lakh. The rising cost of education seems to be a matter of concern for people like him, belonging to a middle-class section of society.
To finance the soaring study expenses, people are inevitably leaning towards education loans. That said, before going forward, it is wise to evaluate the EMI obligations with an education loan calculator and make an informed decision based on that.
Let’s understand why!
Table of contents
Purpose of Student Loan Calculator
By using a student loan calculator, you can be aware of your financial liabilities beforehand. It becomes much easier to manage the repayment and meet other expenses.
For efficient financial planning, you must use tools like an education loan EMI calculator. You can find such a tool on the websites of top financiers. The calculation is based on the terms quoted by them; it helps you determine whether you can bear the EMIs or not for that specified tenure.
Also read: Online Income Tax Calculator
How Does a Student Loan EMI Calculator Help You?
If you are a potential student loan borrower, here are some reasons why you need to use this financial tool:
Fast results
The manual calculation tends to get extremely hectic, especially if you have multiple combinations of loan amount and tenure to compare. Using an online education loan calculator, you can obtain the results instantly.
Accurate calculations
Since you are not relying on the manual calculation procedure, the risk of erroneous results is NIL. However, make sure that the values you are entering while computing the EMI amount are correct.
Easily accessible
One of its key advantages also includes its easy availability. As mentioned earlier, you can find the tool on almost every financial website.
Know the Formula and Examples of Education Loan EMI
The formula used to calculate education loan EMI is this:
EMI = [P x R x (1 + R) ^ n] / [(1 + R) ^ n – 1]
Here, P stands for the principal amount, R signifies the rate of interest, and n denotes the repayment tenure.
It is evident that the EMI computation using this formula will be extremely challenging when you are comparing different lenders. While taking a decision on the loan amount and for how many years you want to bear the EMIs, the process needs to be over as quickly as possible. With a student loan EMI calculator, you can manage it all more conveniently.
Here is an example to help you understand the calculation better. Let’s assume you are availing of an education loan of Rs. 20 lakh at an interest of 6.50% per annum. If you decide to repay it for 15 years, the factors will be —
- P: Rs. 20,00,000
- R: 6.50/12 = 0.54
- N: 180 months
EMI: 20,00,000 X 0.54 X (1+0.54) ^ 180 / [(1+0.54) ^ 180-1]
After solving this equation, your equated monthly instalment amount will be Rs. 17,422.
If you use an education loan interest rate calculator for this evaluation, the result will be presented to you within just a few minutes.
How to Use the Navi Student Loan Calculator?
The procedure of using Navi’s Student Loan Calculator is simple. Follow these steps to get the result:
Step 1
First, you need to enter the loan amount you want to avail yourself of.
Step 2
In case the interest rate is already not provided over there, enter that as well.
Step 3
Now, submit the repayment tenure either in months or years to get the exact EMI amount you have to pay for that particular period.
Step 4
After entering all these values, click on the ‘Submit’ button of the education loan calculator and get results within a few seconds.
Borrowers meeting all the eligibility criteria usually get flexible repayment terms and several perks on education loans. However, the parameters are a little stringent, which makes it difficult for some to avail of a high-value loan. In that case, as an alternate option, you can always opt for a personal loan to cover your son or daughter’s education expenses.
A personal loan for education is an equally beneficial financing option, equipped with zero end-use restrictions. One can avail of such loans of up to Rs. 20 lakh from Navi.
Download the Navi app and get access to funds instantly through a hassle-free process.
Also read: Home Loan Repayment Calculator
Final Word
Now that you have a better understanding of an education loan calculator, make sure to use this before availing of a loan. Provide accurate values to avoid issues in your financial planning.
Frequently Asked Questions
Ans: While the EMI evaluation plays a huge role when you are planning on applying for an education loan, there are some other essential factors you must consider too. These are processing fees and prepayment of an education loan.
Ans: Education loan amortisation contains the systematic breakup of the loan, i.e., the scheduled payments, principal repayment and interest expenses. When you are using a student loan calculator, you will be able to see the amortisation schedule in detail as part of the final EMI calculation.
Ans: This financial tool is user-friendly and available on almost every financial website. All you have to do is enter the values of the principal amount, interest rate and repayment tenure to get the exact EMI amount.
Ans: For an education loan, the moratorium is a time between the loan’s sanction and the first EMI. During this time, students do not need to bear monthly liabilities for such a loan. However, interest accrual continues normally. This phenomenon is known as moratorium interest.
Ans: The Vidyalakshmi scheme is a government initiative that simplifies education loan applications for students. The portal includes a common education loan application form (CELAF) that allows a student to apply to 3 lenders at the same time.
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