Plan for your Personal Loan - Learn to use Personal Loan EMI Calculators

When faced with a shortage of funds, many people may consider taking a personal loan. This may be for various purposes such as home repair, wedding expenses, vacation plans and so on. Moreover, in the case of medical emergencies, it can become extremely essential that this personal loan amount is quickly secured.

For such needs, certainly personal loans can prove to be very useful. Various NBFCs provide personal loans for an amount of up to INR 25 lakhs, while loan approval is taking as less as 5 minutes, with the loan amount being transferred in a period of 72 hours from approval. 

For the approval as well, a personal loan can require minimal documentation, especially, in the case of applying online to certain NBFCs. Moreover, existing customers of these institutes can even avail attractive pre-approved personal loan offers.

But it also worth noting that taking a personal loan also brings the financial obligation of repaying it. This is in the form of EMIs i.e. the equated monthly instalments. You as a borrower will be paying the EMI every month; it can be essential to understand the EMI cost you can incur by taking a personal loan.

This is precisely where a personal loan EMI calculator can be very convenient.

Benefits of personal loan EMI calculators:

The biggest benefit of this tool is that it helps you understand whether you’ll be able to bear the burden of paying the EMI within your budget on a monthly basis. Also in case the amount of the EMI is too high, an EMI calculator can help you in deciding on whether to reduce the principal amount or to go with another financial institution that offers better interest rate. On the other hand, you may even choose to have a longer tenor, thus reducing the EMI amount on a monthly basis.

How they work:

In a personal loan EMI calculator, three factors are considered in making the calculations. These being the loan tenor, amount and rate of interest.

These factors are entered into the below formula:

E=	P x r x	(1+r)n
		(1+r)n-1

Note that here, E denotes the EMI, P stands for the principal amount of the loan, r stands for the interest rate, and n denotes the loan tenor.

Thus, by entering values for P, r and n, the EMI amount can be obtained. Consider that the personal loan is for INR 15 Lakhs, with a tenor of 36 months and interest rate of 14%. Then, in this case, the EMI amount comes to Rs.51,266/month. 

In the above formula, you can choose to enter the value and see the results, or in certain cases even keep changing each parameter with a slider and see how this change affects the EMI. Note that these calculators are available on the sites of various financial institutes.

Lastly, note that knowing how much you can comfortably afford to pay as EMI can certainly reduce any stress or anxiety about taking a loan. Hence, using tools such as personal loan EMI calculator and accordingly having a repayment plan is something that can help every personal loan applicant.