The moment you hear about a Personal Loan, your mind gets puzzled about the EMI calculations. Personal Loans are one of the most popular loan products in the Indian loan industry. A significant percentage of all Indian credit falls under this category. Their unsecured nature, easy availability, and flexible repayment terms make them an ideal choice among aspiring borrowers. However, those planning to avail of a Personal Loan must be aware of certain aspects before finalising their loan decision. One such aspect is the EMI amount to be paid each month.
A personal calculator is a valuable online tool that helps calculate the monthly EMI amount based on the selected loan tenure. Here is more information every borrower must know about a Personal Loan EMI calculator.
What is a Personal Loan EMI Calculator?
A Personal Loan EMI calculator is an automatic online tool to calculate the monthly EMI outgo while repaying a borrowed Personal Loan. It helps ascertain the amount paid each month, allowing you to plan your finances and select a loan term according to your budget.
The tool is highly user-friendly. All you need to do is to enter your loan amount, rate of interest, and select tentative loan tenure. The calculator calculates and displays the monthly EMI amount within a split second. Using a Personal loan EMI calculator, you can compare different loan amounts, loan tenure, and interest rates and determine the loan tenure as per your affordability. All in all, an EMI calculator makes loan planning easier for borrowers.
How Does an EMI Calculator Work?
After taking out a Personal Loan, you must repay it to the lender in monthly repayments called EMIs. These installments cover the loan amount and the interest rate within the selected repayment tenure. A personal calculator helps you calculate your loan EMIs based on these three fundamental components:
- The principal loan amount
- Interest rate
- Loan tenure
The mathematical formula to calculate EMIs is
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
P = Principal loan amount
R = Rate of interest
N = Number of monthly installments
The easy-to-use online EMI calculator works with this formula digitally to display the results within a second. You may use this tool any number of times until you find a tenure with the most convenient EMIs. However, while calculating the EMIs, you will notice that the total interest outgo will increase as you select a longer loan tenure. Therefore, you must choose the shortest possible repayment term to save the interest cost and a reasonably long tenure to keep EMIs affordable.
Best Times to Use a Personal Loan EMI Calculator
A loan calculator for a Personal Loan comes as a savior during different times. These are the best times to use this valuable online tool:
- When Comparing Lenders: Personal Loan EMI calculators are easy-to-use online tools that you may use multiple times, free of cost. You may enter the loan amount and interest rates of different lenders, select a repayment term and see which lender offers the desired loan amount at the lowest interest outgo. So, a Personal Loan calculator helps you make the final decision while comparing lenders.
- When Selecting Loan Tenure: The primary purpose of a personal calculator is to help you select your loan term. Before applying for a Personal Loan, enter the loan amount and interest rate in the calculator, give attention to the EMIs and the total interest outgo and select a loan tenure with the most manageable repayment plan.
- When Prepaying a Loan: When your financial condition improves, you may consider prepaying your loan to become debt-free and save on interest costs. However, you must consider the pre-payment charges before finalizing the decision. A Personal Loan EMI calculator helps you calculate your outstanding balance and savings with the loan pre-payment.
- When Transferring the Loan: You may consider transferring your outstanding loan balance to a new lender offering lower interest rates than what you are paying currently. In such a situation, you may use a loan calculator to measure your savings and EMI with the new lender.
Reasons to Use a Personal Loan EMI Calculator
Some reasons to use a personal calculator include:
Time-Saving: One core benefit of using a loan calculator for a Personal Loan is that it instantaneously displays accurate results. Since it is readily available online, it saves time to visit the lender’s office and wait around to know the monthly EMIs. You may use a calculator 24/7, whether at work, on vacation, or on the go. All you need is a secure and stable internet connection.
Ease of Use: The main benefit of using a calculator is that it is an online tool that is extremely easy to use. You do not need mathematical or technical skills to use this tool. Simply open an online calculator, enter the required details, and the tool does the calculations automatically. If you still need guidance, you may call the lender’s customer care helpline. It will also give you an idea of the lender’s customer service, which you may require over the loan term.
Accurate Results: There are always chances of error when manually calculating the EMIs. With a personal calculator, you no longer need to use your mathematical skills and risk calculating wrong EMIs. Moreover, you do not need to test various combinations until you find the best loan term. With an online EMI calculator, you may change your components any number of times and experiment with different loan tenures without hurting your credit rating.
Simplified Loan Planning: A Personal Loan EMI calculator helps you understand your payable principal, interest outgo, and EMI for a specified loan amount. With these details, you can plan your loan repayment and ensure you do not default on paying the EMIs. It helps you evaluate your lifestyle and calculate how much you must keep aside to pay the monthly loan EMIs. Without proper financial planning, loan repayment and management can become difficult for you.
A personal calculator is now the best choice for EMI calculation over manual calculations. It helps ensure clarity and precision while applying for a loan, helping you to plan your repayment according to your finances and be stress-free.