Personal loan is a type of loan that can be used for a variety of purposes such as wedding, expenses of education, holidays or for an emergency. They don’t require any collateral and are quickly disbursed. Hence, personal loans have become so popular over the years. Some of the essential factors that you need to consider before applying for a personal loan are the interest rates, repayment capacity and tenure of the loan. Manually calculating personal loan EMI could be complex and inefficient. Therefore, it is preferable to choose a personal loan EMI calculator.
There’s no need to be concerned if you still don’t know how to calculate your monthly EMI for a personal loan. Yes, because you no longer need to call the bank to find out how to calculate your monthly EMI. Furthermore, anyone may easily calculate their EMIs with the use of a personal loan EMI calculator. All you have to do is be aware of your-
- Amount of the loan
- Rates of Interest
- Term of the Loan
It’s simple to calculate your EMIs from the comfort of your own home if you understand these three key elements. To be more specific, these are the three key variables that are used to determine the monthly EMI for a personal loan in India. There are, however, other factors that play an important part in EMI calculation. The following are the variables:
- Work profile: Salaried or Self-Employed
- Your Credit History and the Company You Work For
- Other Loans’ EMIs
What is Personal Loan EMI Calculator?
When you take out a personal loan, you must repay both the principal and the interest. An EMI calculator for a personal loan is a tool that calculates the amount that must be paid each month.
You will know the monthly amount you must repay during your loan tenure if you check the amount with an EMI calculator before taking out a personal loan. This will assist you in comprehending the effects that personal loan EMIs would have on your spending and lifestyle.
What EMI stands for?
- The Equated Monthly Installment, or EMI, is the monthly payment that you make to the banks or financial institutions until your entire loan balance is paid off.
- The interest on the loan, as well as the principal amount to be repaid, are included in the EMI.
- Furthermore, the entire sum of the principal and interest is divided by the loan’s duration. As a result, the amount due will be paid on a monthly basis.
- However, the interest component of your EMI will be higher in the beginning months, and it will gradually decrease with each payment.
- In fact, the exact percentage allocated to principal repayment is directly proportional to the rate of interest.
- Furthermore, your monthly EMI will remain the same, but the interest and principal proportions will alter.
- More to the point, with each subsequent payment, the interest must be paid less and the principal must be paid more.
How Personal Loan EMI Calculator Works?
When it comes to personal loan EMI calculators, two fundamental formulae are used.
The monthly interest rate is calculated using the first calculation, while the EMI is calculated using the second. Let’s look at how these two formulas function now:
When you apply for a personal loan, the interest rate is the first thing that grabs the attention. You must first convert annual interest rates into monthly interest rates before using an EMI calculator.
For calculating EMI
When compared to determining the monthly interest rate, calculating the EMI is a little more complicated. You must use the formula below to determine your EMI:
E = P . r . (1+r)^n/((1+r)^n – 1)
P=Principal Loan Amount
r=Monthly Interest Rate
n=Monthly Loan Tenure
Many calculators provide you a little more than just calculating your monthly EMI. Yes, these calculators provide you with more than what you expect, with intriguing graphic representations, pie charts, and tables.