Finance · Uncategorized

What factors affect personal loan EMI calculator?

What is a personal loan?

A personal loan is an unsecured loan that can be availed to meet fund needs. A personal loan does not come with any conditions attached to it. The funds from a personal loan can be used for any purpose, i.e . business or personal.

But how can you check the installation costs that will result from a personal loan? To find out the monthly repayment burden, you can use a personal loan EMI calculator. There are many such EMI calculators available online. A personal loan calculator is usually free of cost to use, and there is no obligation to take a loan from the company for using their loan calculator.

How does a personal loan calculator work?

The formula for calculating EMI is:

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


P= Principal or loan amount
R= Rate of Interest on loan
N=Tenure of the investment in years

A personal loan EMI calculator does not display the formula to calculate EMI. You have to input the loan amount, the tenure in years, and the rate of interest on the loan. The calculator automatically computes the EMI and returns the answer.

Thus, by using a personal loan calculator, you can find out the monthly payout for a personal loan within a matter of few seconds.

The EMI depends on two factors:

• Principal or Loan Amount
• The rate of interest on the loan

These factors depend on:

• Individual need
• Credit score
• Repayment capability, i.e. income earned by the applicant
Principal or Loan Amount:

Most lenders give out loans up to INR 20 lakh. Some lenders even give out loans up to INR 30 lakh. The final loan amount disbursed depends on the income earning capacity. If you have a higher salary, the chances of you getting a higher loan approved are higher.

A personal loan EMI calculator is helpful even when you have not decided the loan amount. The calculator will show the monthly payout, and a repayment schedule, bifurcating between interest paid and principal repaid. This can help you plan the loan.

The rate of Interest:

The rate of interest for unsecured loans ranges from 10% to 20% depending on the lender, and the repayment capacity. If you have a greater ability to service the loan, you can negotiate with the lender for a favourable interest rate.

The personal loan calculator will show the change in EMI depending on the change in interest rate. This is helpful while finalising the loan. The interest component in EMI is higher in the initial months, and at the end of the period, the principal element of EMI is higher.


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