Personal loan EMI calculator

Personal loans are a type of unsecured loans, often referred to as ‘All-purpose loan’, which are usually availed for catering personal needs. The reason for it being called an ‘all-purpose loan’ is that there is no restriction on its usage, i.e. it can be employed to meet any need of the borrower. Also, since it’s an unsecured loan, it does not require any sort of mortgage and is rendered easily by the bank. 

Just like any other loan, the bank charges an interest alongside the principal loan amount. The principal amount of each year and the interest is paid on a monthly basis as Equated Monthly Instalment or EMI. The EMI depends upon the loan amount, rate of interest and tenure/number of periods. 

There is a general mathematical formula for the calculation of EMI that uses the aforementioned three variables. Besides manual calculation, we also have the option to visit a number of online portals, which offer online Personal Loan EMI calculator for free. Let us have a brief knowledge of how the two method works.

How to calculate Personal loan EMI

As mentioned above, there are generally two methods for personal loan EMI calculation, using online EMI calculators and mathematical formula.

Online EMI calculators: A plethora of web portals, banks’ website and other financial websites offer online EMI calculator for free. It contains three blank fields, where you need to input the total loan amount, rate of interest and the number of periods for loan reimbursement. These online platforms serve great utility as one can adjust the variables according to his/her specific need and the results will be displayed accordingly. There is no need to hover your brain over complex mathematical formulas, as the required formula are pre-embedded in the portal. One just simply needs to fill the numbers and will be catered with results, instantaneously.

Manual method: In case, one does not have any mean to access the internet, then also, there is no need to worry as you can use a mathematical formula to get the personal loan EMI. The same three variables are employed here, namely loan amount, interest rate and amortization tenure. You can use a calculator or can do the calculations manually if required. If the formula is used correctly then the result will be no different from that of using the online portal. 
Let us proceed with which formula is employed in doing this.

Formula for mathematical calculation

As we have learnt that while using an online personal loan calculator one does not need to deal with any formula. However, while doing the calculations manually, the following formula is needed to be used: 

EMI = [P x R x (1+R)^N]/[(1+R)^N-1], where

P is the principal amount
R denotes the rate of interest, and
N stands for the number of periods.

Benefits of using Personal Loan EMI calculator

There are a number of benefits of pre-determining the amount of EMI you need to pay after availing a personal loan from any bank. As we have seen that just by inputting the three variables, one can easily have an idea of the repayment figures. This can help you in the following ways.

Pre budgeting: Once you have calculated your personal loan EMI you can then allocate and decide the share of income/saving, which you need to keep for the monthly reimbursement of the loan. This helps you to assuage financial fret and keeps away any sort of uncertainties that may result in complete bankruptcy.

Flexibility: Personal loan EMI calculators offer an infinite degree of flexibility, using which one can easily adjust the inputs. The result will be displayed according to the variation in inputs. A user can change the variables easily to get an idea of what the EMI amount would be over different periods and different interest rates, keeping the loan amount unchanged.

Complete knowledge: Knowing the EMI, a user can frame the chart comprising the entire details of opening and closing balances over the years. Some of the online EMI calculators display the principal amount and interest separately. In that category, a few of them also cater the need of making a chart, thus doing a hefty job for the user.