A Personal Loan EMI calculator is a helpful tool that can help you determine the equated monthly instalments (EMI) that you need to pay when you take out a Personal Loan. You can also use it to calculate the total interest you will pay over the duration of your loan. This calculator also estimates the total amount you will pay for your personal loan, including both the principal and interest. Overall, it helps you better plan your budget.
How can you utilize a PL EMI Calculator?
Are you wondering how a Personal Loan Calculator works? It is very simple. You just input the details, and you get the estimated EMI for your personal loan. Here's a step-by-step guide for using the Personal Loan Calculator.
1. Enter the loan details: Fill in the designated fields with your preferred loan amount, interest rate, and loan tenure.
2. Calculate EMI instantly: After entering your information, the online personal loan calculator will calculate your EMI immediately.
3. Make Adjustments: Adjust the sliders if you wish to change the loan amount, interest rate, or tenure.
4. Customize your Repayment Plans: Input a loan amount ranging from 1 lakh to 5 lakhs and selecting a duration of 6 months to 36 months.
5. Change your EMI amount: To reduce your monthly payments, use the sliders for a smaller loan, a lower interest rate, or a longer duration. Consider a larger loan amount or a shorter repayment period if you want to make greater EMI instalments.
1. Enter the loan details: Fill in the designated fields with your preferred loan amount, interest rate, and loan tenure.
What is the Formula for calculating EMI for Personal Loan?
All online calculators use a common formula to figure out the EMI for a personal loan. Unity Small Finance Bank's EMI calculator for personal loans uses this same formula to accurately figure out what you'd need
to pay each month.
Here's the formula:
EMI = [P x R x (1+R) ^N]/ [(1+R) ^ (N-1)]
Where:
• EMI is the monthly payment you make
• P is the principal or the amount you borrow
• R is the interest rate
• N is the tenure of your loan
You can use this formula for any loan amount.
Example of Personal Loan EMI Calculation
For example, say Ramesh wants to borrow ₹ 5 Lakh for 5 years at an annual interest rate of 18%. He can find out his monthly payment by using this formula.
While this equation might seem complex, an online EMI calculator can quickly tell you what you need to pay, usually in seconds.
In this example, Ramesh would need to pay ₹ 12,697 each month.
What is a Personal Loan Amortization Schedule?
Loan amortization is the process of dividing a fixed-rate loan into equal instalments. A portion of each instalment covers interest, while the remainder goes toward loan debt. The simplest approach to compute payments on an amortized loan is to utilize a loan amortization calculator or template. However, you can compute minimum payments manually using only the loan amount, interest rate, and loan term.
Lenders use amortization tables to compute monthly payments and explain loan repayment information for borrowers. However, amortization tables allow borrowers to understand how much debt they can afford, how much they may save by making extra payments, and compute total annual interest for tax purposes.
Which factors impact your Personal Loan EMI?
Taking out a loan can address your immediate financial needs but may jeopardize long-term financial stability if not carefully planned. It's essential to grasp certain parameters before applying for a personal loan to reduce your EMI and maintain financial control.
Loan Amount
The process of applying for a personal loan has simplified over time, yet it's unwise to borrow more than necessary. Only borrow what you need to avoid unnecessary increases in your EMI, which is influenced by the loan amount and interest rate over the agreed tenure.
Loan Tenure
Selecting a longer repayment period reduces your monthly instalment but results in higher total interest payments compared to shorter tenures. Assess your monthly budget to determine an optimal EMI for the shortest feasible tenure, thus saving on interest and clearing your debt faster. Utilizing an online EMI calculator can help determine the best loan term.
Credit Score
A high credit score (750+) improves your chances of securing lower interest rates, thus reducing your EMI.
Existing Debt
A lower fixed obligation to income ratio (FOIR) of 50-60% suggests manageable financial commitments, increasing your credibility with lenders and potentially easing EMI payments.
Interest Rate Type
EMIs depend on whether you choose fixed or floating interest rates. Fixed rates remain constant throughout the loan term, while floating rates, influenced by the Reserve Bank of India, can fluctuate, affecting your EMI.
Understanding these factors can guide you to make informed decisions, ensuring your loan does not strain your finances.
What are the benefits of using the Unity Bank Personal Loan Calculator?
1. Simple Process: Manually calculating personal loan EMIs can be a cumbersome task. However, using an online personal loan EMI calculator simplifies this by instantly computing your EMIs.
2. Accurate Data: Manual calculations can be complex and error-prone, potentially impacting your budget and financial planning. In contrast, a personal loan EMI calculator automates the process, ensuring accuracy. You can effortlessly compare and choose the loan amount, interest rate, and tenure that best fits your financial needs.
3. Time Efficiency: The EMI calculator saves significant time that would otherwise be spent in manually calculating your total payable amount. Just by entering a few key details, you receive instant information on your expected EMI repayment.
4. Comparison of Options: Personal Loan EMI calculator allows you to modify and compare different variables related to your personal loan, such as repayment tenure, loan amount, and interest rates. This flexibility helps you explore various scenarios and choose the alternative that is best for your financial goals and capabilities.
