What is Personal Loan EMI?

You can avail a personal loan from a bank or an NBFC without pledging any collateral. The loan may be availed for marriage-related expenses, renovating your home, funding a family trip, buying home appliances, or any financial emergency. The bank does not monitor how you use the personal loan.

Personal loan equated monthly instalment, or EMI is the fixed amount of money that you pay each month on the selected date, to repay the personal loan. The personal loan EMI components are the repayments towards the principal and the interest amount.

A personal loan is preferred to other loans as it requires minor documentation, provides the flexibility of usage, and takes comparatively less processing time. Unlike other loans, it usually has a shorter repayment tenure ranging from one to five years.

What is a Personal Loan EMI Calculator?

A personal loan EMI calculator is a simulation that helps you to calculate the EMI amount depending on the principal amount, duration, and the rate of interest. It is a quick and simple solution to pre-plan and balance the inflow and outflow of money so that you don’t run short of cash at any point in time.

A Personal Loan EMI calculator is a formula box with three sliders displaying the Loan Amount, Loan Tenure, and the Interest Rate. Once you fill in the details, the calculator will show you the EMI (Equated Monthly Instalment) amount, that you must pay the bank every month, to repay the loan.

How do Personal Loan EMI Calculators Work?

You can calculate your EMI amount with the help of the mathematical formula given below:

EMI Amount = [P x R x (1+R)^N]/[(1+R)^N-1] 

where P, R, and N are the variables.

It also means that the EMI value will change every time you change any of the three variables. ‘P’ stands for the ‘Principal Amount’. The principal amount is the original loan amount given to you by the bank on which the interest is calculated. ‘R’ stands for the rate of interest set by the bank. ‘N’ is the number of years given for the repayment of the loan.

As EMIs are paid each month, the duration is calculated in the number of months. So, if you take a Personal loan of Rs 10 lakh at an interest rate of 15%, the approximate EMI will be: P = Rs 10 lakh, R = 15%, N = 2 years or 24 months.

EMI = [10,00,000 x 15/100/12 x (1+15/100/12)^24] / [(1+15/100/12)^24-1]

EMI = Rs 48,487.

Benefits of Personal Loan EMI Calculator

Personal Loan EMI Calculator is a hassle-free generic tool, where you just have to enter the principal amount, duration, and rate of interest. You get an accurate picture of the amount you are borrowing, and this helps you to plan your budget.

You are shown a graphic representation of the loan and an amortisation table. It helps you to select the best personal loan, after comparing the interest rates and other offers from various banks. You get an idea of your loan eligibility and approach the bank, only after you are sure of getting the loan.

The personal loan calculator makes complex calculations in seconds. It helps you to gauge your repayment capacity and avoid falling into a loan trap. You get a birds-eye view of your loan, and you can make informed decisions to get the right loan.

Factors Affecting Personal Loan EMI

Several factors affect EMI calculation. For instance, your credit score. The higher the credit score, the better are the chances of getting the personal loan. The loan amount is also dependant on other criteria:

• Income proof
• Investment statements
• Stable employment history
• Housing history
• Debt-to-income ratio
• Social media

Related Calculators:
1. SBI Personal Loan EMI Calculator
2. HDFC Personal Loan EMI Calculator
3. ICICI Personal Loan EMI Calculator