A personal loan can save you from financial distress in a financial emergency. Even though you might not need a loan immediately, it is always good to know that you have such a safety net if required.
One of the primary concerns about taking a personal loan in Bangalore or any other city in India is knowing the Equated Monthly Instalments (EMI). To keep these monthly payments within your budget, you should calculate your EMI before you agree to the loan terms.
What is EMI?
Equated Monthly Instalments (EMIs) help you pay large amounts of money broken into smaller amounts, making the payment easy. You pay your EMI to the lending institution to repay the loan that constitutes the principal amount and a portion of the interest.
You can choose your loan’s tenure (repayment period) between 12 months and 48 months. The longer the tenure, the smaller the EMI, but your interest rate may vary.
In the initial months, the interest component of the EMI is larger, but it reduces with each payment you make. The percentage of principal and EMI depends on the interest rate of your loan.
How to Calculate personal loan EMIs
But here are the basic steps to calculate personal loan EMIs:
The formula used to calculate the EMI for a personal loan is as follows:
EMI = [P x R x (1+R)^N] ÷ [(1+R)^N-1]
Where:
- P = Principal amount
- n = Loan tenure
- R = Interest rate
Let us consider an example as follows:
Loan amount = P = INR 10,00,000
Rate of interest = R = 15%
For monthly interest, you can divide the interest rate by 12 and express it in a percentage as follows:
R = 10.5÷12÷100 = 0.00875
If we apply the above formula:
[10,00,000 x 15/100/12 x (1+15/100/12)^24] / [(1+15/100/12)^24-1] = INR 48,487 EMI.
How to Use a personal loan EMI Calculator?
Applying the above formula can be tedious and time-consuming. You can use a personal loan EMI calculator, available for free on the Clix Capital website, to calculate your EMIs in seconds online.
Just enter ‘How much do you need?’ and ‘How much you can pay?’ to get different plans showing the EMI, interest rate and repayment tenure. Choose a suitable plan and proceed.
The advantage of using the online calculator is that you can change the variables to see the different permutations and combinations. Simply put, you can increase or decrease the loan amount to see how high or low the EMIs turn out.
That way, you can arrive at a preferred EMI for a particular loan amount even before you apply for a personal loan.
Advantages of EMIs
You get several advantages through the EMIs that you use to repay your loans:
Access to Large Amounts of Cash
You can have access to a large amount of cash in a short time. You can use the money to pay for things that you couldn’t otherwise pay in one go. Things like going on a dream holiday, buying new appliances or planning home renovation can now be done without stressing your savings.
Better Utilisation of Money
You can use your funds wisely and do much more with them. EMIs reduce your overall financial outlay, allowing you to use the money for other purposes.
Better Financial Planning
Loan EMI calculators help you plan how much money you will have to spend on EMIs even before you apply for a personal loan in Bangalore or any other city in India.
A personal loan is one of the easiest and best ways to get access to ready cash in case of a financial emergency, as long as you are aware of the risks and use them prudently. Using a personal loan EMI calculator is the best way to keep control of your EMIs so you can be sure that your monthly payments stay well within your budget.
Moreover, if you approach a lending institution like Clix Capital, you can get loans sanctioned quickly up to INR 10 lakhs at competitive interest rates. You also get flexible repayment options from 12 to 48 months, so you are not overly financially burdened.
So use an EMI calculator today and instantly check your qualifying amount and EMIs before applying for a personal loan!