For the uninitiated, a personal loan EMI calculator helps the applicant in calculating the EMI amount, which is calculated on the basis of principal amount and loan tenure.
On the basis of this, the applicant is able to calculate how much he or she has to pay every month in order to clear dues effectively. The EMI calculator is a useful tool, which helps in calculating the amount on the basis of the details you enter.
The following details are important for calculating the EMI amount:
This is basically the Principal Amount that you are planning to borrow.
Loan Interest Rate
Usually, there are two types of loan interest rates, which are offered to the loan applicants – fixed and floating. If you plan to avail the fixed interest rate, the rate will remain the same for the entire period. It easily indicates that the EMI will remain the same for the entire period.
On the other hand, the fluctuating interest rate will vary from time to time depending on the latest base rate. Hence, while opting for a loan, you need to check the details of the interest rate being offered.
The loan tenure is nothing but the time period for which you wish to avail the loan and pay the loan amount in EMIs. It is solely calculated based on your capability to repay the amount.
However, keep in mind that the interest rate increases with tenure. The loan tenure usually varies from 1 year till 5 years if you are opting for personal tenure.
After you have entered the relevant data in the personal loan EMI calculator, it works on a predefined math formula, which helps you calculate your EMI amount.
The formula is described below:
EMI = [P x R x (1+R) ^N]/[(1+R) ^N-1],
In the above formula:
- “P” refers to the principal amount applied for a loan
- “R” refers to the interest rate calculated per month
- “N” refers to the number of monthly instalments
There are multiple benefits that a loan applicant like you can avail after using the EMI calculator.
Saves Time– We all know that calculations are a herculean task if you do not have a math background. Using this tool can save your time and energy in calculating the details.
Accurate Data- Apart from saving time, the result is 100 percent accurate and reliable as well.
Access Repayment Capacity- It additionally helps you assess your capacity to pay as well. This way, you can manage your finances appropriately.
Best Offers- It also shows the best loan offers that any individual can avail to suit their current requirements.
These are a few benefits associated with using the EMI Calculator effectively. Now that you know how to use the tool effectively, manage your finances accordingly.