A personal loan is a sum of money that one borrows from a lending firm to fund their expenses, adjust their debts, or make investments. One can use a personal loan for a variety of purposes. A personal loan EMI calculator is an automatic online tool to determine your Equated Monthly Installment (EMI). EMI refers to the total portion of the loan amount (principal and interest) that you have to repay every month. Your EMI amount depends on the loan tenure, how much money you have borrowed, interest rates, and your creditworthiness.
How to use an EMI calculator?
To use a personal loan EMI calculator online, you have to open the official website of a lending institution that offers this facility. ApnaPaisa offers an easy and accessible online EMI calculator, where you can input details to determine the monthly EMI.
- Type in the amount of money you want to borrow (in rupees), how many years the lender wants you to pay it back (number of months or years), and the interest rate the lender will charge you for taking a loan (in percentage).
- Once you enter these details, the loan EMI calculator will do the math and display how much money has been paid, what percent of the payable amount is interest and how much is the principal, and the monthly settlement you have to pay.
For example, if you want to avail of a loan of INR 50,000 at a 5% interest rate, you have to pay INR 395 every month for 15 years.
Results overview in a personal loan calculator
- EMI amount: Once you enter the loan amount, tenure, and interest rate, the loan EMI calculator displays the monthly EMI amount automatically.
- Graphic representation of your total amount payable: You also get a breakdown of the amount of interest and principal that you have paid, the total monthly payment, and the outstanding balance that is yet to be paid off.
Elements of a personal loan EMI calculator
- Interest paid: This is the amount of loan charges that a bank levies on the borrower.
- Principal paid: This is the actual loan amount with the loan charges levied by the bank or NBFC.
- Total payable amount: This is the combination of principal and interest that a loan applicant pays monthly to the lending institution.
- Outstanding loan balance: This is the sum of money, both principal and interest that is yet to be paid off.
What factors can influence your EMI amount?
- Interest rate: If you have poor credit scores, or cannot afford to make a large down payment, you will be stuck with paying higher interest rates, in turn increasing your monthly EMI amount as well.
- Loan amount: It is always best to borrow a loan amount where you only have to spend 50% to 60% of your total income on EMIs. The higher your loan amount, the higher the interest, resulting in a higher monthly EMI amount.
- Loan repayment period: While it can be tempting to maintain a strict budget and pay off the loan amount in a short period, try choosing a decent tenure. A shorter tenure will result in hefty monthly EMIs. Most home loans have a repayment tenure of 15 to 20 years with manageable monthly settlements.
Why use a personal loan EMI calculator?
- Adjust your monthly budget
Loan EMI calculators enable you to determine your monthly settlement amount. You can check if it is going beyond your expectations or your monthly income. Ideally, you should not spend more than 50% to 60% of your total income on EMIs.
- Maintain a good FOIR
A fixed-obligations-to-income ratio (FOIR) refers to the number of existing loans and credit card bills that you are yet to settle. If the personal loan EMI calculators display an outrageous amount, you can postpone your loan application until you clear your existing debts.
- Ensure an excellent credit history
An excellent CIBIL score depends on whether you have cleared all your monthly debts. Your loan eligibility depends on your income, assets, as well as your credit score. Use a loan EMI calculator to check if you might go overboard with the monthly EMI amount and balance your expenses to prevent debts.
- Find your ideal loan amount
A loan EMI calculator online enables you to compare lenders and input different loan amounts and interest rates to determine your ideal loan amount, which would not put a strain on your monthly budget.
- Easy and affordable
You no longer have to run to the physical branch of a lending institution to determine your monthly EMIs. You can use a personal loan EMI calculator online from the comfort of your couch and determine if you can afford the entire loan amount.
A common question that arises when one takes a loan is if they should pre-pay the majority of the loan amount at the very beginning. This is not as brilliant as it seems as you will lose tax benefits and possibly exhaust a huge portion of your savings. If you have funds, it is best to make a higher down payment. It reduces your payable interest rates considerably. ApnaPaisa offers an easy and accessible personal loan EMI calculator online on their website. You can use it to calculate your monthly EMIs and plan your finances accordingly. If you have good credit scores or the money to make a higher down payment, you will also be able to enjoy reduced interest rates.