Blog > Personal Loan EMI Calculator: Things to consider before applying for Personal Loan
When we talk about loans, first thing comes into our mind is EMI. To calculate the same, everyone needs to understand the EMI world. It is an amount that the borrower pays every month to repay the loan taken either from a bank or a financial institution.
EMI consists of two parts, namely the Interest amount and the Principal amount. Interest is basically applied on the principal amount which is spread across the month of the loan tenure. To calculate EMI, loan amount with accrued interest is divided equally over a period which is known as loan tenure.
a) Loan Amount: It represents the amount taken from the bank in the form of a loan. It acts as one of the primaries factors for deciding monthly installments. As the loan amount increases, EMI paid also increases.
b) Rate of interest: It is the rate of interest charged by the bank on your personal loan. The bank or financial institution determines the same after making several calculations like your income, repayment capacity, credit history etc.
c) Tenure: It is the time taken by to repay the entire loan amount including the interest. This will also have a major impact on your EMIs. One should understand that an increase in tenure means that you will have to pay more interest to the bank.
When goes with an option of Floating interest rate: If you opt for an online personal loan with a floating interest rate, in that case, interest rate keeps on fluctuating, so whenever the interest rate changes, it will also change the EMI amount. For this, you need to instruct the bank or lender not to make any changes in the EMI and make changes in the tenure only.
When you prepay the loan amount: If you make a prepayment of the loan amount during the tenure, in that case also, EMI will change accordingly. After prepayment, principal amount of the loan goes down and interest amount will change according to the new principal amount.
When you choose an option of progressive EMIs: Only a few lenders give an option of repaying the personal loan through progressive EMIs. In this, initially borrower needs to pay fixed EMIs for a specific period. After completion of that term, borrower is paying larger EMIs. This option is preferred by millennials who are at the beginning of their career and are not able to afford larger EMIs.
Understand the process of calculating EMI
EMI= P x r x (1+r) ^n/ ((1+r) ^n – 1)
‘P’ is the amount that you want to borrow.
‘r’ is the rate of interest that is applicable on your loan. It is calculated on a monthly basis instead of
the annual rate of interest.
‘n’ is the duration of the loan in terms of months.
Need of Personal Loan EMI calculator
It provides perfect calculation of the EMIs that you need to pay for the personal loan taken. Moreover, it will also help to know the perfect tenure of the personal loan amount with the loan interest rate that you will have to incur.
EMI calculator will ask you for various details such as your income, the tenure of the loan that you want, credit rating, credit history, etc. Therefore, it will be able to provide you an insight into whether the loan is suitable for you are not in addition to the affordability of the loan.
So, calculate your EMI beforehand can help you find out the monthly cost of your personal loan. Make use of an easy and simple IndiaLends Personal Loan EMI calculator to know how much you will need to pay as EMIs. With EMI calculator, calculate the EMI and the total interest payable according to the loan tenure and personal loan eligibility.
Now that you know all about EMIs, go ahead and explore our amazing low interest personal loan offers and choose one suits your needs.
Don’t forget, at the end of the day, loans are liabilities and it is in your best interest to calculate the EMIs beforehand to make informed financial decisions and stay out of debt forever!