Monthly Instalment (EMI)
Total Interest Amount
Total Amount (Principal + Interest)
Whenever someone is planning to take a personal loan, he/she is concerned about these things- interest rates that he/she will be offered, loan tenure for the relaxed repayment and the EMI (Equated Monthly Installment) that he/she will have to pay. The interest rates and the loan amount is decided by the banks/NBFCs depending on the overall profile of the applicant. Once the rates and the repayment period are final, the borrower would look forward to knowing the EMI or equated monthly installments that he/she will have to pay for the personal loan.
Now, what is an EMI or Equated Monthly Installment? It is the monthly installments that the borrower has to pay and is calculated on the basis of the interest rate, tenure and loan amount. Since everything is digitalizing, calculating the Personal Loan EMI is very easy with the help of the personal loan EMI calculator.
Table of Contents
- 1 What is Personal Loan EMI Calculator?
- 2 Parameters on which Personal Loan EMI is calculated
- 3 Personal Loan EMI Calculator Formula
- 4 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 smart, time-saving tool helps in letting you know the exact amount of your monthly installments that you need to pay each month so as to repay your loan.
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 loan with the below requirements:
Loan Amount- ₹ 2,00,000/- Tenure- 5 years and Interest Rate- 14.50% p.a.
On the basis of this data, the monthly installments that the borrower will have to pay is:
Table for EMI per month, Total Interest Outgo and Total Amount
|Loan Amount (in ₹)||Interest Rate (p.a)||Tenure (in Years)||EMI (in ₹)||Total Interest Outgo (in ₹)||Total Amount (Principal + Interest) (in ₹)|
|Year||Principal (in ₹)||Interest Outgo (in ₹)||Balance Amount (in ₹)|
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 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.
Processing Fees: Other than the interest rate, banks charge a certain processing fee at the time of the loan approval. In general, the processing fee ranges from 1.50% to 2% of the loan amount.
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 look 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 are 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. For example, if the rate offered is 14.50% p.a., the monthly rate interest rate would be 14.50%/12 = 1.20% per month.
- 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 criteria 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 tool 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 personal 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.