The past year’s economic turmoil has affected numerous individuals in India, with loss of employment leading to a liquidity crisis in most households. In such cases, personal loans have emerged as the most viable financial product that has allowed borrowers to meet various financial requirements, both emergency and otherwise within a short period.
Nonetheless, before opting for this credit line, it is essential to acquire a fair idea about the equated monthly installments payable for the loan availed. Knowing your monthly outgo beforehand would help plan your monthly budget accordingly and reduce the risks of defaults.
One of the most effective ways to compute the monthly installment amount is to use a personal loan EMI calculator
Online calculation of personal loan EMI
To use the EMI calculator, three values are considered –
- Interest rate
- Loan amount
- Tenor
Each of the values against these parameters has to be entered into the online calculator. Once all the necessary values are put in, the results will be computed within a few seconds. The result shall indicate the exact monthly installment to be paid by the borrower.
The accurate results acquired from the personal loan online calculator enable borrowers to initiate comprehensive financial planning.
The EMI calculator uses the following formula to compute the monthly instalment amount –
E = P * r * (1+r) ^n / ((1+r) ^n-1)
In the above formula,
E = Equated monthly instalment
P = Principal loan amount
r = rate of interest
n = duration or tenor
Based on this chosen tenor, lenders frame the amortization schedule, including a detailed table of periodic payments. It shows the accurate breakdown between the principal and interest components included in every monthly installment. The amortization schedule is tabulated till the complete repayment of the loan.
Advantages of EMI calculator
Using this online tool to calculate personal loan EMIs can proffer the following benefits –
- The chances of error are minimized.
- EMI calculation is a matter of seconds.
- Such EMI calculation would help in the evaluation like an appropriate repayment schedule.
- Suitable monthly installment amounts can be chosen that may be repaid without affecting a borrower’s finances negatively.
Prominent NBFCs like Bajaj Finserv extend a personal loan of up to Rs.25 lakh at an attractive rate of interest, against minimum eligibility requirements.
Moreover, the loan application process is also streamlined for borrowers through the availability of pre-approved offers. Such offers make availing of credit much easier and faster but all you have to do is to submit your name and contact number to check your pre-approved offer.
How can you reduce your personal loan EMI?
After the necessary computation in the personal loan EMI calculator, you see that the monthly outgo amounts to a considerable amount, you can avail some simple measures. Those are –
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Longer repayment tenor –
When you opt for a longer repayment tenor, the loan cost is spread across a longer duration.
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Low-interest personal loan –
Negotiate with your lender for a reduced interest rate so that CIBIL score is important for personal lending and helps to negotiate a lower rate. It leads to reduced monthly installments.
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Search for suitable lenders –
Before availing of a doorstep loan, it is advised to do the necessary research so that It would help you to find out the deals that meet your requirements as well as your repayment capacity.
Thus, it can be understood that using a personal loan EMI calculator can help you to plan your borrowing better. Even then, be sure to take note of the various related charges before signing a personal loan agreement because you have to ensure that you are not adding to your liability.
