What is a Personal Loan EMI Calculator?
EMI is the amount that a borrower has to pay in the loan tenure to repay the personal loan amount. Each EMI repays a part of the due amount i.e., the principal and the interest due on the loan amount. Personal Loan EMI is the monthly repayment that borrower needs to make to repay the loan according to the personal loan amortization schedule. The tool that you can use to determine your EMI payout is the Personal Loan EMI Calculator.
In general, the initial personal loan EMIs contribute more towards payment of the due interest as compared to the principal. However, in due course of the tenure of the loan, subsequent EMIs contribute more towards repayment of the principal amount.
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How it works?
EMI calculation is based on the inputs given by an applicant. Following are the inputs required for EMI Calculator
- Interest Rate: The Interest rate is charged on the loan amount. There are two types of interest rate fixed or floating. In fixed interest rate loans, the rate remains the same throughout the tenure of the loan. Whereas, in case of floating interest rate, the rates vary from time to time according to the base rate that results in EMIs variations.
- Loan Amount: The borrowed amount is the loan amount. The ROI is applied to this amount, and then it is divided into monthly EMIs, according to the tenure loan. An applicant can enter the loan amount into the EMI calculator according to his/her loan requirements. EMI or monthly installments should not surpass 40% of your monthly income.
- Loan tenure: It is the period chosen by the applicant for loan repayment. Generally, tenure ranges from 1 to 5 years. The loan tenure is flexible, which means that the applicant can choose the repayment tenure, which suits his requirement. The personal loan tenures range from 1 to 5 years.
Generally, the personal loan EMI calculator works on two arithmetic formulae and includes two calculators, interest rate calculator and EMI calculator. The first calculation is simple and is used to calculate the monthly interest on a personal loan, and the second calculation is a complex one and is used to calculate the personal loan EMI.
Personal Loan EMI Calculator
Personal loan EMI calculation is a long and tedious calculation, which can be a complex one for most of us. For calculating the EMI, you need to know the personal loan amount, the tenure you want to borrow the amount for and the interest rate on personal loan that you will be charged. The tenure of the loan should be converted to months before substituting it in the following formula for calculating the personal loan EMI.
The EMI calculation for a personal loan is very long and tiresome. Meanwhile, it is very complicated for most of us. The personal loan amount, the tenure for which you want to borrow the amount, and the interest rate are used for the calculation of EMI. The tenure should be converted into the months for calculating personal loan EMI.
For calculating the personal loan EMI, following formula is used:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1],
In this formula, the letter stands for:
EMI is the equal to monthly installment
R stands for the rate of interest that is levied on the loan amount
P is the principal amount, i.e., the amount borrowed as a loan
N is the tenure of the loan repayment or the number of monthly installments that you will pay
It is hard to calculate personal loan EMI with the help of Excel or by hand, as it is a complex process. Meanwhile, it is best to use a personal loan EMI calculator for the same. Using this calculator would save you from the tedious calculation, wastage of time, and also provide accurate results. It is an easy-to-use tool which can be used any number of times without a pause!