At The Lending Monk, we make you think clearly about making a financial decision by demonstrating how your net monthly income influences your ability to borrow. When you are applying for a loan – personal loan, home loan or business loan, lenders will always consider your income as an indication of your capacity to repay the loan and your general financial health.
When banks and NBFCs verify your income they will also look at the structure of the loans EMI. If you’re aware of EMI calculation and using an EMI percentage calculator, you will understand how you will break down your income into monthly instalments, and how much you will pay in interest during the loan period.
Why Net Monthly Income Matters in Loan Eligibility?
Your net monthly income determines how much loan obligation you can comfortably afford to take on. Lenders include the total amount of EMI payments you must make, therefore lenders will ensure that your EMI obligations do not exceed 40–50% of what you earn. If your EMI obligations exceed this 40-50% ratio then you are more than likely to have a challenged loan application.
Lenders will also examine your debt to income ratio to ensure you do not have an overabundance of additional loans. The lower your debt ratio markers essentially mean that you are in a more sound financial position, therefore the loan approval probabilities will be higher with The Lending Monk or any other financial institution.
EMI Calculation and Its Percentage Breakdown
An EMI involves two things, the repayment of the principal and the interest. Many borrowers wonder, how do you calculate EMI percentage to determine how much of my EMI payment goes to interest, and how much goes to reduce the principal.
If you use an amount of EMI%, a reliable EMI percentage can help you not only perform the EMI percentages needed, but may also informally tell you the calculations will be the same whether it is calculated at 1 percentage per year, or 3 percent per year. EMI percentage calculators will clarify the process of reviewing the differing monthly payments. Overall, EMI percentages can help you know monthly payouts, so you can actually know a lower cost option based on the same loan but with different costs.
How to Calculate EMI Percentage for Loans?
Knowing how EMI percentage is calculated gives you an exact understanding of loan costs. Whether it’s an SBI home loan or a personal loan from other banks, finding out the percentage of EMI helps you make informed decisions.
For those who want manual calculations, there are more manual calculation methods available for percentage EMI and many Excel tools available, but online calculators are the fastest and easiest way to get the correct and instant EMI percentage details.
Using EMI Calculators with Different Interest Rates
Interest rates can differ according to lenders or loan types. An EMI calculator with percentage options allows you to see different scenarios, such as an EMI calculator of 1 percentage or 3 percent per year. It will help you know how much money you will have to repay under different interest conditions.
These tools can be helpful for a variety of reasons, such as when you must decide between fixed or floating interest rates or you are comparing banks and their offers.
Manual EMI Interest Percentage Calculation
Even though digital tools are widely known, many borrowers still value performing an EMI interest percentage calculation manually because it allows them to have more control over their finances. Understanding how to calculate EMI interest percentage manually prepares you to understand the true cost of your loan interest burden even when you don’t have these digital tools.
You will also develop a skill in calculating the percentage from the EMI that will be helpful for you whenever you want to review the terms of the loan or when you want to negotiate with the lenders.
EMI Percentage Calculation for Credit Card EMIs
If you choose credit card EMI plans such as the Citi credit card EMI percentage calculator, it’s vital to know the amount of interest charged. Each credit card issuer may have a different interest rate for converting to an EMI option, so it’s important to know how the EMI percentage is derived from the credit card before committing to this option for repayment.
Conclusion
At The Lending Monk, the most important of all the advice I give about borrowing money, is based on your net monthly income and the EMI calculation. If you know how to calculate an EMI percentage—for example manually, excel or using an online EMI percentage calculator—you will be making informed, simple, easy financial decisions.
If you are looking for a homemade regular loan or a home loan, or even converting credit card dues into EMIs, if you know how to think about the calculations, you as a borrower will be safe and every one’s future surprises will be limited.