Whether you want to make an expensive home purchase, wish to renovate your home, or go on an exotic vacation, personal loans come handy to cover the immediate funds’ requirement for such short term expenses. However, a lot of borrowers feel clueless about the basic questions related to personal loans such as how much the loan would cost them, how long they need to pay the EMIs, and so on.
If you’re also facing a similar dilemma, an EMI calculator can be extremely useful to help you find exactly how much your personal loan will cost you in terms of tenure and interest payments.
Wondering how does the Personal Loan EMI Calculator help you choose the best loan? Read on to know more.
EMI, or Equated Monthly Installment, is the amount that a borrower has to pay throughout the loan tenure in order to repay the loan amount taken by them. With each EMI, the borrower repays a part of the due amount, i.e. the principal and the interest due on the loan amount.
In case of a personal loan, the borrower needs to make a monthly repayment, called personal loan EMI, in order to repay the loan according to the personal loan amortization schedule.
The formula used to calculate the personal loan EMI is the following :
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
- P is the principal or the amount borrowed as a loan
- R is the rate of interest levied on the loan amount
- N is the tenure of repayment of the loan or the number of monthly installments that the borrower needs to pay.
Personal loan EMI calculator- It is a tool that the borrower can use to determine the installments or the EMI payout on the loan taken by them. It eases the tedious task of calculating your EMI along with displaying the best personal loan offers as per your loan eligibility and requirements.
Importance of Personal Loan EMI Calculator
There are several benefits of using calculators for personal loan EMIs. Some of these are discussed below-
- Calculate exact EMI in seconds
The benefit of applying for personal loan EMI and using EMI calculator is that you can find out in advance the exact value of each EMI along with the number of EMIs that you will need to pay in future. Not only this gives you more clarity about the affordability of the loan but also provides insights about how to manage expenses better during the loan tenure.
- Find out the tenure of the loan
EMI calculator also allows you to find out the right tenure of the loan you are going to avail. If you choose to pay EMIs for a longer duration to reduce the interest rate, then the tenure of the loan would be greater and vice-versa. This gives you the flexibility to decide the best possible tenure for the loan by altering the value and number of the EMIs.
- Loan Eligibility
The other benefit of Personal loan EMI calculator is in finding out the loan eligibility. Since the EMI calculator asks for information such as your monthly or annual income, you will be able to find out whether you are eligible for a loan or not.
- Enables comparative pricing
EMI calculator allows you to compare the overall cost of a loan from various lenders. This will help you in making your final decision after comparing several offers based on the results of the EMI personal loan calculator.
How Does Emi Calculation On Personal Loans Online Work?
When you apply for a personal loan online and wish to calculate your EMI in advance using the personal loan EMI calculator, all you need is 3 important details including-
- The total loan amount
- The interest rate charged
- Loan tenure (The longer the loan tenure, lesser will be the monthly EMI payment, but greater will be the total interest amount charged over the entire loan period)
Let’s understand this better with an example-
Suppose you have taken a personal loan of Rs 10 lakhs for a tenure of 3 years and want to check what your EMI will be at an interest rate of 12% p.a.
Using the personal loan calculator, you can easily calculate the following-
- Monthly EMI payment
- The total amount of interest you need to pay over the loan tenure
- The total amount you need to repay including loan amount and interest amortization table (including the details such as interest and principal component of EMI payment, the balance outstanding and the percentage of the loan you have paid off each year)