When you plan to avail of a personal loan, you must consider your net monthly income and your current obligations so that you know how much loan amount you can take to ensure EMIs are affordable. This is where an online personal loan EMI calculator comes into the picture. With the help of this tool, you can quickly estimate the monthly EMI of your loan.
EMI and its calculation
EMI or Equated Monthly Installment (EMI) is the amount that you need to pay to your financial institution with whom you apply for a loan. EMI is the sum of principal amount and interest divided by the tenure period (number of months) in which the loan needs to be repaid to the lender. Hence, EMI depends on the amount borrowed by you and the loan tenure. It must be paid monthly. The interest component of your EMI is larger during the initial period and gradually reduces with the passing months and payments made.
Formula to calculate EMI
EMI = [P x R x (1+R) ^N]/ [(1+R) ^N-1]
Here, E is EMI, P is the Principal Loan Amount, R is the rate of interest per month, if the interest rate is per annum, then the rate of interest will be – interest / (12 x 100)], N is the duration to repay the loan in months.
How does EMI calculation help in loan planning?
Using an EMI calculator will give you a clear idea of the amount that you need to pay towards your loan. Thus, a personal loan eligibility calculator can help you to plan your monthly budget and expenses accordingly to the outflow towards the loan every month.
An EMI Calculator also helps you to estimate the loan amount and the tenure period for which the loan must be availed. Therefore, knowing your loan EMIs in advance is important to calculate your personal loan eligibility and planning your budget so that your borrowing journey becomes better.
How to use EMI Calculator?
An EMI calculator is just like a simple calculator that helps you calculate your monthly loan EMIs. It is calculated based on three factors i.e. Loan Amount, Loan Tenure, and Interest Rate. After filling in the desired details, you will get to know the EMIs that you need to pay to the financial institution every month to repay your loan. You can find this calculator online and calculate your loan EMIs easily.
What are the Factors affecting Personal loan EMI?
The listed below are the factors that affect personal loan EMIs-
- Loan amount – This is the amount that a borrower decides to avail from the lender in the form of a loan. The higher the loan amount, the higher will be your monthly EMIs.
- Rate of interest –This is the interest charged on the loan amount borrowed by you. The lower the rate of interest, the lower will be your EMIs.
- Loan Tenure –This is the duration for which you avail of a loan. The longer the loan tenure, the lower will be your monthly EMIs.
An EMI calculator helps you a lot in evaluating your current standing and the amount of EMI you need to pay to your lender. So, while availing of a personal loan online, you can make use of this calculator to plan your budget.