The Indian lending sector’s operative model has undergone a significant change over the past few years, owing to growing digitalisation. Various new-age and traditional financiers have adopted digital solutions for their existing products, including personal loans.
A personal loan EMI calculator is one such innovation that streamlines the lending system with a calculated repayment strategy. Such tools are easy and generally free to use.
Different online portals use different programming for an online personal loan EMI calculator. However, in any case, individuals need to provide three basic components to get the results using this tool: loan amount, tenor, and interest rate.
Following are the steps to use an EMI calculator online:
Step 1: Visit the website of a credible lender and enter the loan value or adjust on the scale.
Step 2: Enter a tenor convenient for you.
Step 3: Finally, put the personal loan interest rate offered to you.
By entering these details, you can get the following results –
With this information, you can determine the loan amount and select a tenor that offers the most convenient EMI. Therefore, this online calculator helps you plan your personal loan EMI repayment better.
The mathematical formula to calculate EMIs of a personal loan is below.
Monthly Equated Instalments (EMI) = P × r × (1 + r)n/((1 + r)n - 1)
Here, P = principal, r = rate of interest, n = tenor in months
Note: If you get the annual interest rate, you need to divide it by 12 to calculate monthly instalments.
A personal loan EMI calculator works on this basic formula. However, it provides accurate results within seconds that otherwise take a long time while done manually.
For better understanding, let’s take an example.
Suppose a borrower opted for a personal loan of Rs.10 lakh for 36 months with an interest rate of 13%. That individual needs to pay an EMI of Rs.33,694; the total interest would be Rs.2,12,980 and the overall payment would be Rs.12,12,980.
The entire calculation took only a few seconds with a personal loan EMI calculator.
Now that you know how to calculate personal loan EMIs easily, you should also consider the other benefits of this online tool.
Following are some crucial benefits of using a personal loan EMI calculator –
Besides the fast calculation, using online devices like these also produce accurate results every time. In contrast, a manual calculation can be erroneous. For instance, when applying for a high-value loan, even a slight miscalculation can cause major issues later on as you start servicing the loan. The repercussions are not that grave when it’s a small personal loan, but can still result in discrepancies to the tune of thousands.
Online calculators like these allow individuals to select loan offers judiciously. Borrowers can provide different values and check to find an offer that meets their convenience. Note that the interest rates on a personal loan for salaried employees are different from that of self-employed ones. So, be mindful while putting interest rate.
These EMI calculators are free to use. Usually, they are available on a lender's website and do not require one to log in or pay any charge to use them. Moreover, one can use it infinite times.
Usually, EMI calculators like these are accompanied by a loan amortisation schedule. This document contains a detailed break-up of monthly instalments, which helps individuals plan their finances better.
The amortisation schedule is an excellent source of planning part-prepayments and foreclosure. EMIs do not contain consistent parts of interest and principal. Therefore, individuals can determine the perfect time to part-prepay or foreclose that will help them sizeably on personal loan interest.
Select NBFCs, including Bajaj Finserv offer this online tool to help their personal loan borrowers calculate EMIs and borrowing costs.
They also extend pre-approved offers that make loan availing straightforward and quick. Such offers apply to various products, comprising personal loans and business loans. Check your pre-approved offer online by entering a few vital details.
Now that you know how you can use a personal loan calculator, it will be easier for you to ensure a pleasant borrowing experience. You can also use a loan eligibility calculator besides a personal loan EMI calculator for more convenience. Therein, you need to enter basic income and employment details. Following that, the calculator will show the maximum loan amount you are eligible for. Thereafter, you can plan your finances accordingly and apply for a specific amount to avoid chances of rejection.
