How to calculate interest on a business loan?

2 min read

When taking a business loan, calculating the interest, you need to pay on the principal amount borrowed is crucial as it impacts how affordable the loan is for you. Use the Bajaj Finserv Business Loan EMI Calculator to compute the interest component in your EMIs as well as the overall interest due on the loan.

This online tool is free and easy to use. Enter the following information:

  • The loan amount that you wish to borrow
  • The tenor or repayment duration in months
  • The applicable rate of interest, which starts at 17% for the Bajaj Finserv Business Loan

Once you enter these values, the business loan EMI Calculator gives you three results:

  • Total interest payable
  • Total payment (principal and interest)
  • Your EMI (monthly repayment)

This is a simple and efficient way to calculate your interest on a business loan. It also helps you make the right decisions regarding your loan amount and tenor. For instance, if your EMIs are too high, you can increase the tenor or decrease your loan amount.

Business loan EMI calculation formula:

Using the interest rate on your business loan, the Bajaj Finserv Business Loan EMI calculator works on the following formula:

E = P * r * (1+r) ^n / ((1+r) ^n-1)

Where:

  • E is EMI
  • P is the principal loan amount
  • r is the rate of interest calculated every month
  • n is the tenor of the loan

Here’s an example of how to calculate the interest and EMI of your business loan:

Say you want to borrow a business loan of Rs. 20 lakh (P), with an interest rate (r) of 18% and a loan tenor (n) of 4 years. The calculation is explained below:

E = 20,00,000 x 18%/12 x (1+18%/12) ^4/[(1+18%/12) ^4 – 1)]

EMI = Rs. 58,750

When you use the EMI calculator, you will also be able to see:

Total interest: Rs. 8,20,000

Total payment: Rs. 28,20,000

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