### How to use this EMI Calculator?

The ClearTax Personal Loan EMI Calculator is a handy tool that calculates the monthly amount payable to the lender (bank). To calculate the EMI applicable to your loan amount, you must use the sliders and adjust the values for the Principal Amount (P), Time Duration (N), and Rate of Interest (R). Follow these steps to calculate your EMI Amount:

• Use the slider and select the loan amount.
• You then select the loan tenure in months.
• Move the slider and select the interest rate.
• The calculator shows you the EMI Payable, Total Interest, and the Total Payable Amount.
• Recalculate your EMI anytime by changing the input sliders.
• EMI will be calculated instantly when you move the sliders.

## 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

## FAQs on Personal Loan EMI Calculator

• How can I use this personal loan EMI calculator to find the best loan for my needs?
Personal loan EMI calculator can be used to compare loans from different banks, as each bank charges its interest rate. The tenure may also vary from bank to bank. You must enter the borrowed amount, interest rate, and the tenure in the Personal loan EMI calculator. You will be able to find the best bank for the personal loan, with the least EMI that matches your budget.
• What do secured loans and unsecured loans mean?
A secured loan is secured against an asset, usually property. An unsecured loan is one where there is no asset offered as security. The best example of an ‘unsecured’ loan is the personal loan.
• How long can I take to repay my personal loan?
The time allowed to repay your personal loan ranges from over 12 to 60 months. However, the vital thing to keep in mind is the time taken to repay the loan will directly affect the EMI. If you want to lower the EMIs, then you must take the loan for a longer period. But remember, a longer tenure of repayment means you will have to pay more interest.
• Can I prepay my personal loan?
Personal loan outstanding amounts can be paid either in full pre-payment mode or in partial pre-payment mode. For a full prepayment, the entire loan amount can be settled in one single payment. For partial prepayment of your outstanding amount, you pay a part of the principal.
• What is a credit report, and how important is it for the application of a loan?
A credit report is used by financial institutions to access the capacity to repay a loan. It considers the details of your previous borrowing, how much outstanding credit you have, as well as information on how many missed or late payments you may have made.
• Does the Personal Loan EMI Calculator use the flat balance or reducing balance interest calculation method?
In the flat balance method, the interest you pay on the personal loan would be calculated on the total loan amount over the entire duration of the loan. In the reducing balance method, the interest would be calculated for each successive month. The principal on which the interest would be calculated reduces with time as the duration of the repayment progresses. The online personal loan EMI calculator uses the reducing balance calculation method to calculate the personal loan EMI.
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