How to Calculate EMI of a Personal Loan


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Whether you need assistance to fund your child’s higher education, foot a large, unexpected medical bill, or host a lavish wedding ceremony, personal loans aid in bridging financial gaps between your savings and your wants and responsibilities in a hassle-free manner.

On taking a personal loan, you must repay the amount via EMIs or Equated Monthly Instalments. As taking a personal loan involves paying a fixed amount diligently throughout the tenor, when you borrow, you must remember to forecast the exact EMI amount. This will go a long way in helping you plan for repayment in advance, tweak your budget if need be, and even alter the loan amount depending on your affordability. So before you apply for financing, take a look at how the EMIs of a personal loan can be calculated with ease.

What is the EMI formula and a personal loan calculator?

The formula to calculate EMI is as follows:

EMI = [P x R x (1+R) ^ N]/[(1+R) ^ N-1]

Where, P stands for the principal amount

R is the interest rate

N is tenor

There are many ways to compute your monthly instalments, the easiest of which is to use a personal loan calculator. While you can adopt a pen-and-paper approach to EMI calculations, manual calculations are time-consuming and susceptible to errors. To counter these drawbacks, it’s best to use a personal loan calculator. It is an online tool that helps you compute your EMIs by generating results based on values entered for the principal, interest rate, and tenor.

The EMI calculator is easy to use too and displays results instantly. Further, as it is an online tool, you can use it any time of day, as per your convenience. The calculator is also free to use and therefore, you can use it multiple times, until you arrive at a viable EMI amount. Moreover, some calculators even offer an amortisation schedule to help you understand the interest-principal breakup of your EMIs and the addition of pie charts helps you view your EMI and total interest outgo at a glance.

What are the main parameters required by the loan EMI calculator?

The principal amount, tenor, and interest rate are the 3 important factors you need to feed into the personal loan calculator. Any adjustment made to these values will have a bearing on the EMI amount displayed. This means that if the EMI is seeming too high, you can decrease the loan amount, increase the tenor or both. However, bear in mind that while an increase in the tenor lowers your EMI, it increases the overall cost of the loan as well. Similarly, lowering the tenor increases your monthly payments but reduces the total interest payable, so use the calculator to strike a healthy balance between the two.

How can you compute your EMIs using the online loan calculator?

Below are the steps you need to follow in order to use the loan EMI calculator:

  • Enter the loan amount you wish to apply for, the tenor, and rate of interest. You can do so by feeding values into the correct fields or by using the sliders provided, if any.
  • View the EMI amount, total interest payable, and total payment (interest + principal) displayed by the loan EMI calculator for the values entered.
  • In case you are not comfortable with the EMI amount displayed, adjust the loan parameters by re-entering values.
  • Repeat this procedure until you arrive at an affordable EMI plan.

Now that you know how to use a personal loan calculator, consider some results derived from the online tool, assuming an interest rate of 18%.

Loan amount (Rs.) Tenor (months) Rate of interest (%) EMI (Rs.) Total interest payable (Rs.) Total payment amount (Rs.)
15 lakh 48 18 44,062 6,15,011 21,15,011
15 lakh 60 18 38,090 7,85,418 22,85,418
25 lakh 48 18 73,437 10,25,010 35,25,010
25 lakh 60 18 63,484 13,09,005 38,09,005

The table makes clear the impact the principal and tenor have on your outgo. As the rate of interest is a lender-specific parameter, remember to pick one wisely. Apart from a competitive interest rate, also ensure that the lender doesn’t levy any hidden charges that add to your cost of borrowing. A transparent lender to consider is Bajaj Finserv.

Bajaj Finserv offers Personal Loans of up to Rs.25 lakh at competitive interest rates and via easy-to-meet eligibility criteria. You can repay the loan conveniently by selecting a tenor of up to 60 months. Further, to make it effortless for you to address monetary requirements as and when they arise, the NBFC provides Flexi Personal Loans. These enable you to withdraw amounts from your total sanction on the go without submitting multiple applications. Moreover, you only have to pay interest on what you withdraw as opposed to the entire sanction.

In addition to using the personal loan calculator to arrive at an affordable loan structure, don’t forget to check your pre-approved offer from Bajaj Finserv for instant financing. A customised deal hastens disbursal and enables you to access funding in moments.

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