With easy access to finance nowadays, we have embraced Loans as an essential part of our lives to meet all planned and unplanned expenses. While Personal Loans are a blessing, they can be a nightmare if you do not plan them right, from the time of application to repayment. You need to prepare to take on the financial commitment.

Before you apply for a Personal Loan, it is essential to know if you can afford the repayments. You can use the EMI calculator to do the same. It is a smart move if you wish to check the equated monthly instalment amount before applying for the Loan at a bank. It informs you of your monthly repayments and educates you on how much interest you can pay during the tenure.

The calculation

To use the Personal Loan EMI calculator, enter the Loan amount, tenure, and interest rate. The calculator starts computing the EMI based on the formula

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

Here, P stands for principal Loan amount, R stands for interest rate per month, and N stands for the number of monthly instalments.

Significance of using the calculator

• Simple, convenient, and accurate:The EMI calculator can perform complex calculations in seconds, which would otherwise take hours with paper and pen. You can make quick decisions about the desired scheme. Because there is no human intervention, the calculations are 100% accurate and quick.
• Planning EMIs:By calculating your EMIs before applying for a Loan, you need to pay your debts, thus avoiding missing your EMI payments, which leads to lower credit scores.
• Allows modifications:Knowing your EMI amount helps you better understand how your life and expenses will change once the instalment payments kick in.
• Experiment with figures:One of the striking features of an online EMI calculator is that you can customise it according to your requirements. You can experiment with different numbers in the column (amount, Loan term, and interest rate) to get results configured to suit your income and tailored to your needs.
• Self-learning tool:Financial calculations involve complex figures and formulas. A Personal Loan calculator simplifies complicated calculations. With a few details, you know your EMI amount and how much interest you need to pay monthly throughout the Loan tenure. The calculator also computes the breakdown of EMIs, the interest amount, and the principal component, which you need to pay monthly.

Conclusion

You do not need a banker to explain the calculation. With a click of a button, the figures you need are displayed on the screen for you to understand, analyse, and plan. You can change the variables and use the tool 24x7 without hindrances.