Personal loans can be a panacea for a number of financial crises. Whether it is an emergency or a wedding, be it a renovation at home or the urgency to buy a luxury item for your loved one – one can raise a personal loan from a bank or a financial institution to address it .
The first-time borrowers are recommended to use a personal loan EMI calculator to streamline their money plan and act accordingly.
Those who are not aware, a personal loan EMI calculator is a tool that helps borrowers to calculate the exact EMI (equated monthly instalment) after they enter three determinants of EMI which are loan amount, interest rate and tenure.
Three determinants of EMI calculator:
a) Tenure: This is the time period in which you intend to pay the loan. For instance, if you want to repay the loan in a span of 3 years then loan tenure will be 3 years (or 36 months).
b) Loan Amount: As the name suggests, it refers to the amount of loan which you intend to raise. For instance, when you intend to raise ₹10 lakh from the bank, the loan amount will be ₹10 lakh.
c) Rate of interest: This refers to the rate at which bank (or any other financial institution) will charge interest. When the bank is charging 1 percent interest per month, then ROI will be 12 percent per annum which you need to enter in the EMI calculator.
As you enter these three determinants mentioned above, the calculator will throw up the exact EMI that you will be supposed to pay.
Loan Amount: ₹10 lakh
The EMI calculator will use these inputs to share the result as ₹33,214.
One interesting feature of the calculator is that you can tweak it to increase or decrease your result (i.e., EMI) based on your convenience.
For instance, when you want to repay the loan quickly, say in a span of 16 months , you need to simply cut down the tenure in the calculator. This will raise the EMI amount accordingly.
Likewise, if you want to repay the loan in a span of 48 months, you can change the tenure figure. This would lower the EMI amount proportionately.
