What you Need to Know about your Personal Loan EMI
EMIs are the monthly payments you need to make to your financial institution in order to repay a loan. EMIs have two components: the principal amount and the interest that is charged on that amount. Your EMI will vary depending on your principal amount, the rate of interest that you have to pay on it, and the tenor of your loan.
Depending on the nature of your personal loan, your EMI may change during the tenor of your loan. This happen if you opt for a floating interest rate or an EMI plan that allows you to pay in small instalments initially and larger instalments later. Your EMI may also change if you opt to prepay your loan amount so as to bring down the loan principal, and by extension, the interest that you have to pay.
Once you’re sure about the specifics of your Personal Loan, that is the rate of interest, principal amount and tenor, you can use this simple formula to calculate your Personal Loan EMI.
EMI= P x R x (1+R) ^N/ ((1+R) ^N–1)
Here, ‘P’ corresponds to the principal amount, ‘R’ represents the rate of interest calculated on a monthly basis, and ‘N’ connotes the tenor of the loan in months.
For example, if you’ve taken a loan of Rs.15,00,000 at 9% p.a. interest for 5 years, your figures will look like this:
P = 15,00,000
R = 0.09/12 = 0.0075
N = 60 months
Once you replace the letters in the formula with the values, you will get your Personal Loan EMI, which in this case is Rs.31,138.
While calculating the Personal Loan EMI manually isn’t impossible, it certainly is complicated and time-consuming. A simpler alternative is calculating the EMIs using a Personal Loan EMI calculator.
Since complex mathematics isn’t everyone’s forte, it is helpful to use an online personal loan EMI calculator to help you calculate your EMI instantly and accurately. All you need to do is type in the principal amount, rate of interest and tenor of the loan, and the calculator does the rest. You can even move the sliders to adjust the principal, interest rate, and tenor.
The best part is that the calculator also gives you results such as the total interest amount that you have to pay, which in this case is Rs.3,68,246 and the total repayment amount, which is Rs.18,68,246.
Besides, it also gives you a loan amortisation schedule or a loan repayment schedule. It is essentially a chart that allows you to visualise your loan repayment. Based on your principal and tenor, it breaks down the amount paid towards principal and interest for each EMI, for the entire tenor. This schedule makes it easier for you to plan future payments.
Bajaj Finserv not only offers you a handy online EMI calculator to check your Personal Loan EMIs, but it also offers the loan itself at a nominal rate of interest. Besides, features like a long tenor, flexible repayment terms, online application and online loan management make this one of the best personals in the market.
If you intend to prepay a part of your loan, you can use a specific calculator too. Simply enter details into the part prepayment online EMI calculator to see your new, adjusted EMI. For example, for the above scenario, if you want to make a prepayment of Rs.5 lakh, the EMI calculator will show you that your new EMI is now just Rs.20,758. Your revised tenor will become 37 months and you will be able to save 33.34% on EMIs. Similarly, you can also use a foreclosure calculator to check what your foreclosure amount would be, depending on the month you choose to foreclose your loan in.
An online EMI calculator is especially useful before you apply for a personal loan, or when you are deciding between multiple loan options. It allows you to take a holistic look at what your Personal Loan EMIs are going to be before you sign the dotted line.