Are you planning to take a personal loan? Before applying for one, it is imperative for you to find out the best interest rate for the loan and strategise a plan to repay it without any mishaps. Personal loans are available in the market through a wide variety of lenders like banks and financial institutions. After taking the loan amount, you need to repay the loan amount in the form of easy monthly instalments or EMIs. EMI is a fixed amount of money paid every month to the lender.

EMI Calculator

It is better to know your EMI in advance before applying for a loan. Using an EMI calculator can help you figure that out. It will help you understand whether you can afford that amount easily or not. Personal Loan EMI Calculator is a helpful online tool that lets you know your EMI based on the factors like principal amount, interest rate, loan tenure, etc.

To have a clear understanding of how an EMI Calculator works, you have to understand the factors responsible for calculating Personal Loan EMIs. The EMI depends on the following factors:

1. The principal loan amount of the loan: It is the amount you borrow from the bank or financial institution. You decide the loan amount based on the funds you need, provided the lender is willing to loan that amount to you. If you take a higher principal amount of the loan, you will need to pay a higher EMI.

2. The rate of interest on the loan: It is another important component. The lender decides the interest rate levied on the principal loan amount. It can vary from lender to lender. Sometimes, the interest rate is different for different borrowers, even with the same lender. Factors such as credit score and eligibility norms decide your interest rate. If the bank levies a higher interest rate, you will have to pay a higher EMI.

Since we are on the topic of personal loan interest rate, it is vital to know that there can be two types of interest rates: fixed interest and floating interest. You can choose the type of interest based on your preference. In the first type, you avail of a loan at a fixed interest rate, and your EMI remains fixed for the entire term. If you choose the floating interest rate option, your EMI will vary according to changes in the benchmark interest rate.

3. Tenure of the loan: It is one of the factors in determining the EMI amount. It is the exact period, months or years within which you have to pay back the loan to the lender. You can pick the tenure as per your repayment ability. If you choose a shorter tenure, you will have to pay a higher EMI.

EMI Calculation

EMI can be calculated using an EMI Calculator as per the formula mentioned below:

EMI = [P x r x (1+r)^n]/[(1+r)^n-1]

• Here, P is the principal amount that you take as the borrower.

• r is the rate of interest that is levied on the loan amount.

• n is the term or the tenure of repayment of the borrowed loan.

Benefits of Using a Personal Loan EMI Calculator

After taking the loan, you must repay the loan in the form of easy EMIs. Here is how using the Personal Loan EMI Calculator help you:

Saves Time and Effort

Personal Loan EMI Calculator allows you to save a lot of time and effort. When you calculate the EMI traditionally or manually, you will have to go through a tedious and complex process. It will take a lot of time and effort to do that. Rather, the online calculator needs you to just punch in the details of the loan and click on ‘calculate’.

No Chance of an Error

In the manual method of EMI calculation, there are high chances of error or wrong calculations. It will not just take several hours to perform the calculations for knowing the loan EMI amount, but it may not give you the right figure. However, an online Personal Loan EMI Calculator can perform the task with accuracy.

Free of Charge

You don’t need to pay any fee for using the Personal Loan EMI Calculator. It can be used free of cost.

Pictorial Representation

Many Personal Loan EMI Calculators are intuitive to understand. They provide graphical information, colourful charts or pictorial presentation of the data so that you can better understand the principal, tenure, interest, etc.

Conclusion

EMI calculator is the best tool that facilitates all your loan calculations. A simple slider can adjust the values in the EMI calculator and provide you with precise figures. Such calculations make it easy to gauge what amount or tenure works best for you. You can use it for personal loans as well as other types of loans.