A personal loan is one of the most popular loans that are available. This type of loan is popular because it is both unconditional and unsecured. This means that the lender does not put any conditions on the borrower for the use of funds. Except for a few prohibited uses for funds, there are no conditions on the use of funds. This loan is also unsecured which means the borrower does not need to put up any security for the loan. This makes it a popular loan option for people to opt for.
But before you apply for a personal loan, it is important to find out the instalments that you will have to pay on taking this loan. This is very important because if you already have existing loans, then lenders will not lend you your required loan amount.
You can find out the monthly instalment amount by using a personal loan EMI calculator. This EMI calculator will tell you the instalment of loan that you will have to pay for a given principal and rate of interest. The EMI consists of both principal repayment and interest payment and over the loan tenure, the EMI will completely repay the loan off.
The personal loan EMI calculator is a free tool that is available on most of the lenders websites. Anyone can access the tool and use it to find out the EMI amount. The EMI calculator requires the following details:
- Principal amount
- Rate of interest
- Loan tenure
Once you enter these details, you need to submit it and the EMI calculator automatically calculates the monthly instalment amount. Some calculators also give a breakup of the principal repayment and interest payment amount.
Some loan EMI calculator have the interest rate already input in the calculator based on the lender’s interest rate. But others have a flexible table where you can enter the rate of interest by yourself.
The personal loan EMI calculator uses the following formula to calculate the monthly EMI:
EMI = P x R x [(1+R)^N]/[(1+R)^N-1]
P = Loan principal
R = Rate of interest
N = loan tenure in years
A personal loan EMI calculator is an excellent option to find out which loan to opt for. Since these loan calculators allow you to put in the principal and interest rate, you can use them to find out whether the lender is giving you a good deal or not. You can also find out the impact of loan tenure on EMI through this calculator.
Using this calculator is a must to plan your finances if you are planning on taking a personal loan.