Personal Loans are a form of unsecured loans offered by banks and non-financial institutions. The borrowed money gets utilized to meet various needs of an individual. Some of the most common reasons for opting for personal loans are debt consolidation, home renovation expenses, unforeseen medical expenses, destination weddings etc. Like any other loan product, the loan amount needs to be paid back within a predetermined time frame and with interest.
As personal loans have gained popularity, all lending institutions are now in the fray with their offers. The schemes on offer are many and often may become difficult for a potential borrower to decide which offer is the best suited to one’s needs.
Why Calculating EMI Is Important?
Personal loan interest rates vary in between the different institutions who are active in this market. Once a loan has been sanctioned, the burden of repayment along with interest is going to come onto you. Therefore, it is advisable to check the EMI amount for personal loan and apply only when you are comfortable. Some of the main reasons as to why you need to calculate EMI beforehand are as under:
- Helps in Financial Planning – EMI is going to be a part of your monthly liability that will have to be serviced out of monthly inflow. Knowing how much is going to be paid will help you in personal financial planning.
- Helps In Improving Your CIBIL Score – It is implied that you will do your own calculations and zero down on the EMI, which is most comfortable for you. A timely honouring of the EMI will improve your creditworthiness.
Personal loans are meant to help you in the time of need. You need to take care that you are not led into a debt trap. A personal loan EMI calculator is a crucial tool to help you in this regard. The calculator provides you with an error-free, accurate, and immediate result as soon as you put in basic information pertaining to your planned loan.
What is Personal Loans EMI Calculator and How Does it Work?
An EMI calculator is an online tool available on all sites of banks, non-banking financial companies as well as financial advisory organizations. These are accessible without any expense. The personal loan EMI calculator shows you how much will be your EMI and the total interest that you are going to pay over the loan tenure.
Calculating your Personal Loan EMIs
The basic formula that a personal loan EMI calculator follows is as under:
EMI = [Principal X Interest X (1+Interest)No. of EMI] / [(1+Interest)No. of EMI – 1]
Using a personal loan EMI calculator is easy. Three values are to be entered:
- Loan Amount
- Interest Rate
- Tenure of the loan
Just by entering these values, the EMI amount will show up instantaneously for you to make a decision regarding the loan.
As is evident from the above-mentioned aspects, the role of a personal loan EMI calculator cannot be undermined. It aids to plan your repayment, therefore helping in your financial planning. You can tune EMI calculations by changing around the values until you hit upon the option most suited to you.