A personal loan, also known as a consumer loan, is a type of loan that is usually unsecured and taken by an individual for a short period of time. It is basically taken to meet any financial needs like family expenses, home improvement, holiday or perhaps for personal or business use and for procuring any facilities for others.
Personal loans are preferred over other loans as they require less documents, provide flexibility of application and take comparatively less time to process. Unlike other loans, it usually has a short repayment term of 1-5 years. EMI Calculator is a quick and easy solution to pre-plan and balance your cash inflows and outflows, so that you never run out of money. EMI calculator is a formula box with 3 inputs, namely- loan amount, loan tenure and interest rate. Once you fill in the details, the calculator will tell you the EMI (Equal Monthly Installment) amount that you will need to pay.
Formula for calculation of emi
You can calculate your emi amount using the
following mathematical formula:
EMI amount = [P x R x (1+R)^N]/[(1+R)^N-1] where P, R and N are variables.
This also means that the EMI value will change whenever you change any of the 3 variables. Let us discuss these 3 variables in detail. ‘P’ stands for ‘Principal Amount’. The principal amount is the principal loan amount given to you by the bank on which the interest will be calculated. ‘R’ stands for interest rate set by the bank. ‘N’ determines the number of years given for repayment of the loan.
Factors Affecting Personal Loan EMIThere are many factors that affect the EMI calculation. Because the EMI is mostly based on the principal amount, tenure and interest rate. Any change in these variables may cause a change in the EMI amount. Before this, one should know that there are many other factors depending on which the personal loan (amount) offered may vary. For example, your credit score. Higher the credit score better are the chances of getting a personal loan (amount). Hence, you can manage your credit score by paying your credit card bills on time and keeping credit card balances low. Apart from this, there are other criteria based on which the loan amount may vary, viz
What is a personal loan?
A personal loan is a type of unsecured credit. which are provided by financial institutions like banks or non-banking financial companies (NBFCs). Personal loans are given based on your credit history and ability to repay from personal income. It is also known as consumer loan. This is a multi-purpose loan, the sole purpose of which is to fulfill individual needs.
What is Personal Loan EMI?
Equal Monthly Installment (EMI) is a method of paying the principal amount and loan interest steadily on a monthly basis until the loan is paid off in full. Each EMI payment includes both the principal loan amount and the interest charged. With the benefit of relatively short processing time and minimal paper work, one has to meet requirements like a good credit card score and take care of high interest rates.
What is Personal Loan EMI Calculator?
Personal loans are unsecured loans given to people for various personal reasons, such as meeting financial needs such as paying off debts, wedding expenses, unexpected medical expenses and others. A personal loan EMI calculator helps you to know the loan installment that needs to be paid at regular intervals. It enables you to assess the total outflow in terms of loans.
How can EMI calculation be helpful?
EMI calculation gives a clear estimate of the amount that needs to be set aside to pay the monthly installments. Which enables you to take an informed decision about the loan outflow every month. So, knowing the EMI amount helps you plan your expenses properly, while knowing how much you need to keep for it on a monthly basis.