Buy it now on EMI, or save and buy later?Save or loan calculator: compare saving up with buying on EMI.

How to use the save or loan calculator

1. Enter what the item costs today and how many years you’d save before buying it.
2. Enter how much you expect its price to rise each year, and an expected return a year on your savings.
3. Enter the loan rate you’d pay to buy it now. Then compare the monthly saving with the EMI, and see how much the cheaper way may save you.

How to read your result

Cost if you wait is what the item may cost after the years you save. Monthly saving needed is what you may set aside each month to buy it then. EMI if you buy now is the monthly loan payment over the same years. The last line shows which way costs less in total, and by how much.

For example, a car that costs ₹8 lakh today could cost about ₹9.3 lakh in 3 years, if prices rise 5% a year. Saving for it at an assumed 8% return means about ₹22,700 a month, or about ₹8.2 lakh put in over 3 years. A loan of ₹8 lakh today, at an assumed 10% for 3 years, has an EMI of about ₹25,800, or about ₹9.3 lakh in all. Saving up costs about ₹1.1 lakh less.

Buying now gets you the item sooner, and sometimes that matters, for work or for family. Saving first means no interest and no EMI to worry about. The calculator doesn’t count loan fees, a down payment or offers on the price. If you save in mutual funds, returns are market-linked and not guaranteed. To look at the loan on its own, try the EMI calculator.

How the save or loan calculator works

If you wait, the price grows by the yearly rise, and the calculator finds the monthly amount that could reach it while earning your expected return. If you buy now, a loan covers today’s price over the same years, and the EMI uses the standard loan formula. Then it compares what you pay in all on each route. C is today’s cost, g is the yearly price rise, t is years, n is months, i is the expected return a year divided by 12 and j is the loan rate divided by 12.

Cost if you wait = C × (1 + g)^t; Monthly saving = Cost if you wait ÷ (({[1 + i]^n − 1} ÷ i) × (1 + i)); EMI = C × j × (1 + j)^n ÷ ([1 + j]^n − 1); Difference = (EMI × n) − (Monthly saving × n)