A Personal Loan EMI calculator is an excellent online tool that helps you calculate your monthly instalment amount and total loan cost. These results allow you to make better financial decisions while borrowing a loan. When looking for a quick funding option, a Personal Loan often comes to the rescue due to its no end-use restrictions, unsecured nature, instant approvals, and quick disbursals. While Personal Loans are easy and fast to get, you must consider your equated monthly instalments (EMIs) affordability and choose an optimum loan term before submitting the application form. The best way to evaluate the EMIs and find your perfect loan term is to use a Personal Loan EMI calculator. In the following sections, we will elaborate on the importance of an EMI calculator on Personal Loan applications.
What is a Personal Loan EMI Calculator?
An EMI calculator is a free online tool which helps you calculate a loan’s monthly payable amount. Based on the results, you can decide how much loan amount you should take and what loan term you must select to keep the EMIs affordable within your monthly budget. A longer tenure leads to smaller EMIs but higher interest outgo, while a shorter tenure reduces the interest cost but increases the monthly EMI amount. Therefore, you must balance the EMIs with your monthly budget to keep them easily repayable. An EMI calculator calculates your EMIs based on your loan amount, interest rate, and loan tenure, helping you decide on an adequate loan amount and repayment term.
How Does an EMI Calculator Help During the Personal Loan Application?
The best Personal Loan in India has flexible loan terms you can select according to your monthly repayment capacity. However, using an EMI calculator is always advisable before applying for a loan and deciding on a repayment tenure. Let’s see how this online tool helps during the Personal Loan application:
Delivers Accurate and Quick EMI Calculations
The mathematical formula to calculate Personal Loan EMIs is [P x R x (1+R)^N]/[(1+R)^N-1]. Here, P = Principal Amount, R = Rate of Interest, and N = Number of Months in the Loan Tenure.
You can use this formula to calculate the EMIs manually. However, it is a time-consuming, complex, and error-prone process, and you may need to repeat the process multiple times until you reach your desired results. A Personal Loan EMI calculator eliminates these problems and generates accurate results within no time.
Instantly Shows the Estimated Loan Cost
Most EMI calculators also show the total interest cost and the loan cost along with the monthly EMI amount. Based on these results, you can estimate your monthly obligations and plan your budget accordingly. However, when calculating the loan cost, remember to consider the processing fee and other additional charges that contribute to the overall cost of borrowing. If you plan to foreclose or prepay the loan, consider the associated charges when calculating the total cost.
Helps Select an Optimum Repayment Tenure
The repayment tenure you select largely impacts your EMI amount and total loan cost. Longer-term results in smaller EMIs, thus increasing your repayment affordability. You can accommodate more planned and urgent expenses and your other financial goals. On the other hand, a shorter term increases the EMI commitment, allowing you to close your loan faster. Remember, while a shorter tenure reduces your total interest payout, longer-term increases it. To determine an optimum repayment tenure for your Personal Loan, calculate EMIs for different loan amounts and repayment terms and take a decision according to your affordability.
Increases EMI Affordability
Lending institutions prefer applicants with financial obligations of at most 30-40 % of their monthly income. Using a Personal Loan EMI calculator, you can estimate your EMIs and ensure the payable amount does not exceed your repayment capacity. If the amount is high, you can choose a longer tenure to reduce the monthly commitment and improve your chances of approval.
Makes Financial Planning Easier
Personal Loans are great funding options to tackle any financial emergencies. You get instant monetary help, and you can repay the amount through simple EMIs. When it comes to interest rates, you get two options- fixed and floating. As the name suggests, a fixed rate is non-changeable throughout the tenure. On the other hand, EMIs for floating rate loans keep changing during the tenure according to market fluctuations.
Lets You Compare Various Personal Loan Plans
Using an EMI calculator helps you compare the various loan plans based on the principal amounts, interest rates, and total loan cost without impacting the credit score. This online tool allows you to experiment with different options and opt for the best personal loan in India according to your loan requirement and repayment capacity.
You can easily make a soft enquiry without paying any intermediary or agent to do these comparisons and calculations. Based on the results, you can decide on a loan amount that fulfils your loan requirement without hindering your lifestyle, day-to-day expenses, and current obligations.
Steps to Use a Personal Loan EMI Calculator
In order to apply for a Personal Loan and calculate your personal loan EMI, you need to input the required information in the designated spaces. Furthermore, utilizing a personal EMI calculator can be helpful in this process.
- Loan Amount: the amount you wish to borrow as a Personal Loan
- Interest Rate: the percentage of the loan amount the lender charges for their service
- Repayment Tenure: the period you require to repay the borrowed amount with interest
Once you enter these variables, you will see the EMI amount and the total loan cost on your screen. If the EMI amount is larger or smaller than your affordability, you can adjust the repayment tenure to reach a term with budget-friendly monthly commitments. The best thing is that this tool is available for use absolutely at no cost, and you can use it any number of times until you achieve your desired results.
Using a Personal Loan EMI calculator to calculate your monthly obligations is an excellent way to begin the borrowing process. It helps you understand the various borrowing aspects and simplifies decision-making more effectively. Simply enter the required variables and select a loan scheme that best suits your preferences.
