A personal loan would then be a dependable source of funds. Because they are unsecured, personal loans have higher interest rates than home or auto loans. As a result, you must be aware of your finances ahead of time.
Personal Loan EMI Calculator is a tool that you can use to calculate the future monthly payments you will need to make to repay your personal loan.
What Elements Can Affect Your EMI for a Personal Loan?
- Loan Amount: Based on your ability to repay the loan, your relationship with the bank, and other considerations, the lender will determine the maximum loan amount you are eligible for.
- Interest Rate: In this case, the interest rate is also inversely related to the EMI. The EMI increases proportionally to the interest rate. The bank will determine the interest rate on your loan based on a number of factors, including your income, credit history, ability to repay, and so on.
- Loan Tenure: The loan tenure you choose has an inverse effect on the EMI. The EMI decreases as the term lengthens. However, if you have a longer-term loan, you may end up paying more in interest. The loan terms available typically range from 12 to 84 months.
How is the monthly interest rate on a personal loan calculated?
The interest rate being offered is the key piece of information you seek out when you go to a financial institution to apply for a personal loan. Since the interest rate is always presented as an annual rate, you must convert the rate into a monthly one once you know it and before using it to calculate the EMI.
The formula listed below is used to achieve this.
- Interest Rate/12 times Monthly Interest Rate
- As an illustration, your monthly interest rate will be calculated as follows if the interest rate on your personal loan is 18% p.a.
- 18/12 = 1.5
- This indicates that the interest rate will be 1.5% per month.
Use of a Personal Loan EMI Calculator’s Advantages
The advantages of using a personal loan EMI calculator are listed below.
- Compare loans: Loan comparisons Put in a fixed loan amount and term, then change the interest rate and processing fee to the ones the relevant bank has set. You can choose your personal loan product based on this comprehensive picture of the total cost of your loan.
- Saves time: The time is saved Using a calculator, EMI can be calculated in under a minute. Additionally, EMI calculators are 100% accurate and very simple to use.
- Choose the loan term you prefer: Compare your EMIs for different loan terms to determine which one is best for your financial situation. Choose a shorter tenure if you are willing to pay a higher EMI and want to repay your loan sooner. Otherwise, you can always choose a tenure that is longer.
- Verify the repayment schedule: The bank’s personal loan EMI calculator also fully breaks down your repayment schedule. By doing so, you will be able to estimate how much principal will remain unpaid as well as how much interest will need to be paid.
- Verify EMI information: By using an EMI calculator, you can confirm the repayment schedule that the bank has provided. Additionally, a calculator can be used to figure out the processing fee that must be paid in advance (usually deducted from the sanctioned amount).
Summing Up
People have begun to use online calculators in place of performing EMI calculations by hand. On their online websites, many banks offer a calculator that is free to use. Online access to the personal loan EMI calculator formula is mentioned above.
You can estimate the monthly payment you must make over the course of your tenure by using an online calculator. This is very beneficial because borrowers can see how the loan will affect their spending and way of life.
Remember! Interest rates differ between banks. Before selecting the loan option that best suits your long-term objectives, you must compare each interest rate.
