Business Loan EMI Calculator vs Excel: Which Is Better?
One of the most important particulars of a business loan is the monthly installments that
you have to pay attention to. The loan amount is to be repaid in equal monthly
installments over the tenure. It dictates the interest outgo throughout the tenure and the
total cost of the loan. The EMI amount includes the interest factor. Hence, it is important
to calculate the EMI before you borrow money. It will help you plan the repayment
efficiently and will make it easier for you to stick to the budget. It is a mathematical
calculation and you can either use Excel or a business loan EMI calculator to get an
insight. Let us discuss both the alternatives in detail.
Excel Spreadsheet
In order to calculate the EMI using an Excel formula, you need to follow PMT. You need
to use the below-mentioned formula:
=PMT(NPER,Rate,FV, PV, 1)
Rate is the interest rate on the loan divided by 12. NPER is the number of EMI for tenure.
You can get it by multiplying the number of years into 12. FV is the balance remainder
after the last payment, PV is the loan amount.
You will notice that the formula is complex and the variables can lead to error or a
miscalculation which can negatively affect your ability to make a sound financial
decision. You could also miss out on a good offering due to the inaccuracy in results.
Hence, using an EMI calculator for the purpose is an ideal choice. You can easily avoid
the risk of miscalculation and get an accurate answer in no time.
EMI calculator
An EMI calculator is a handy tool that is free to use and is available online. It will
automatically calculate the EMI amount and will also show the interest outgo without any
manual calculations. In order to get an accurate answer, all you need to do is fill in the
details with regard to the loan amount, tenure, and interest rate. Click on ‘calculate’ and
you will get an answer in no time.
Excel or EMI calculator?
Now that you are aware of both the ways you can calculate the EMI amount, you need to
choose one method that works best for you. Using Excel can be complex, time-
consuming, and could lead to errors or miscalculation. Using the business loan EMI
calculator will save time and effort and will make it easy and convenient for you to get
an estimate. It will also help with better decision making.
Knowing your EMI is crucial information and it will allow you to plan the repayment in
advance. You will have better control over the cash flow and you will be able to identify
a loan amount that fits your repayment capability. Hence, always make it a point to use
the calculator before you approach a lender or sign on the loan documents.
A business loan can serve multiple purposes and take the business to new heights. When
making a borrowing decision, you need to be aware of your repayment ability and ensure
that you are making a well-informed choice.
