Personal Loan EMI Calculator
EMI Calculator 6087 views
Monthly Instalment (EMI)
Total Interest Amount
Total Amount (Principal + Interest)
A personal loan at a low-interest rate and a higher loan amount is the one that we look for as these all together decide the EMI (Equated Monthly Installment). Now, what is an EMI or Equated Monthly Installment? It is the monthly installments that the borrower has to pay within the tenure. Since everything is digitalizing, calculating the Personal Loan EMI is very easy with the help of the personal loan EMI calculator. It is important to note that EMI does not include the processing fee which is a one-time payment done at the time of loan application. Also, now that GST is here, the processing fees and other service related charges will increase. However, the EMI that you will have to pay is only dependent on the interest rate, loan amount and tenure.
Table of Contents
- 1 What is Personal Loan EMI Calculator?
- 1.1 Parameters on which Personal Loan EMI is calculated
- 1.2 How Does Personal Loan EMI Calculator Work?
- 1.3 Personal Loan EMI Calculator Formula
- 1.4 What is an Amortization Table?
- 1.5 What is the use of Personal Loan EMI Calculator?
- 1.6 Features and Benefits of a Personal Loan EMI Calculator
What is Personal Loan EMI Calculator?
An EMI calculator is the tool that is used to calculate the monthly installments of a personal loan. With the help of a Personal Loan EMI Calculator, a borrower can easily know his/her monthly installments in the most hassle-free manner. This time-saving tool helps in calculating the exact monthly installments as per the convenience and hence in making the right move.
In order to get the detailed information about the monthly installments, the total interest outgo and the total amount (principal + total interest), a customer must fill in these details in the EMI calculator:
- Loan Amount
- Interest Rate
Now, let us take an example for the better understanding. Let us assume that a person is looking for a personal loan of the loan with the below requirements:
Loan Amount- ₹5,00,000/- Tenure- 5 years and Interest Rate- 10.99% p.a.
Table Showing EMI, Interest Outgo, and Total Repayment Amount EMI, Total Interest Outgo, Total Repayment (Interest + Principal)
Total Interest Amount
Table Showing EMI, Interest Outgo, and Total Repayment Amount
EMI, Total Interest Outgo, Total Repayment (Interest + Principal)
Parameters on which Personal Loan EMI is calculated
Here are the parameters based on which personal loan EMI is calculated:
Loan Amount: The first and the most important thing to know when it comes to calculating EMIs is actually the loan amount. The monthly installment of the loan is directly dependent on the loan amount which varies from lender to lender and is calculated on the basis of the personal loan eligibility.
Interest Rate: Be it any loan, the interest rate that a person will be offered on the money borrowed is the main base that actually decides the exact amount of your EMIs. Generally, different banks offer different personal loan interest rates. So, the higher the rates are, the more EMIs you need to pay. And, if the rates are lower than your monthly installments also be reduced, hence less burden on your pocket.
Tenure: The longer the tenure, the easier it is for the debtor to repay the fund to the banks or to the financial institution from which he/she is taking the loan. For a personal loan, the general tenure is up to 5 years.
How Does Personal Loan EMI Calculator Work?
In a personal loan equated monthly installment calculator, two formulas are used where the first one is used to calculate the monthly interest rate and the second one is used to calculate EMI. Here is the mechanism of these two calculators –
- Monthly Interest Rate Calculator: Be it any kind of loan, a borrower always looks for lower interest rates available in the market. As soon the person gets to know the rates, he/she must convert the rate into monthly one as the rate of interest given is always on an annual basis. By doing so, the borrower gets a clear picture of the monthly installments that he/she will be liable to pay to the bank or NBFCs. To calculate the monthly interest rate, the annual rate is divided by 12.
- EMI Calculation: The EMI is calculated with the help of EMI calculator formula wherein the calculation is done on the basis of the loan repayment period, loan amount and interest rate.
Personal Loan EMI Calculator Formula
The calculation in the EMI calculator is done through the below-given formula:
E = P . r . (1+r)^n/((1+r)^n – 1)
E = EMI (Equated Monthly Installment)
P = Principal Loan Amount
r = Monthly Interest Rate
n = Monthly Loan Tenure
What is an Amortization Table?
Amortization is the process of reducing the value of an asset or the balance of a personal loan by a specific periodic amount. Every time the EMI is paid, there is some of part of principal also paid along with it. The principal is the original loan amount that the borrower has to pay. However, by making regular periodic payments, the principal gradually decreases and slowly comes to zero.
What is the use of Personal Loan EMI Calculator?
Be it any kind of loan, the most important thing that the debtor looks for is the EMI. For the calculation of the monthly installments, Personal Loan EMI Calculator is the tool used. Unlike any other loan, a personal loan is an unsecured loan where no collateral is required to get a loan. However, there is certain eligibility criterion set by different banks on the basis of the profile of the loan applicant like the income, age, profession, monthly income, etc. Since this loan can be taken without keeping any asset as security, the rates are calculated is directly dependent on the repayment capacity of the applicant, monthly expenses and other financial liabilities (if any). The best advantage of taking a personal loan is that the borrower has the freedom to use the money as per their choice as there are no conditions attached to the usage of the money.
Some of the important questions that a borrower must ask to himself/herself are- How much will amount do you need? How much money will you pay as interest? The answer to all such queries is the EMI calculator. By mentioning the basic details in the calculator, you can get a clear picture of the monthly installments that you will have to pay for the loan amount.
Features and Benefits of a Personal Loan EMI Calculator
EMI calculator has many advantages and some of them are as follows:
Accuracy: The manual calculation of the monthly installment might not give the accurate results as the calculation is a little tricky. However, if the calculation is done through online EMI calculator, the result would be accurate for sure. So, it would be suggested to use the EMI calculator instead of getting into such complicated calculation.
Time-Saving: As the calculation is a little difficult, doing it manually would be a little time consuming and might not be convenient for all. But, with online EMI calculator tool, a person can get correct results in few seconds. Hence, using a calculator is more suitable in this world where everyone is in hurry.
Easy Comparisons: On the basis of the loan amount, tenure and interest rates, a borrower gets various options to choose from. But, comparing all the options manually is not so easy and convenient. But, with the help of the calculator, a loan seeker can do a quick comparison of EMI and choose the best-suited one.
Endless Adjustable: A person is free to do the calculation of the EMI as many times as he/she wants. In times when a borrower is looking for the lowest interest rates on the loan amount that he/she desires, high EMI amount stops him/her to move ahead. But, there is always an option to re-adjust the tenure or the loan amount till the time the person is comfortable in paying till the EMI. For such cases, an EMI calculator is the perfect tool to use.
Fit loans to Budgets: Anyone who is looking for a personal loan would be concerned about the rates and the loan EMI that he/she will have to pay every month. Now, these payments are done on regular basis from the borrower’s monthly income. With the help of the calculator of personal loan EMI, a person can get the exact loan EMI that he/she will be liable to pay to the bank. Doing so would help him/her manage the monthly financial expenses and budget according.
Tells More Than EMI: An EMI calculator is not restricted to the monthly installment calculation. There are some calculators that provide a graphic representation of the personal loan and amortization table where a person gets to the gradual payment he/she has made to the banks/NBFCs from where the personal loan has been availed.
Accounted Processing Fee: In general, the personal loan EMI calculators tells the monthly installment on the basis of the interest rates, tenure, and loan amount. But, banks have certain processing fee that is also kept in account while calculating the monthly installments. There are some EMI calculators that consider the processing fee charged by the bank and shows the amount after adding that amount. Now that GST has been implemented, all indirect taxes like processing fees, service charges, and prepayment charges have increased marginally.