When it comes to personal finance, taking out an instant loan is one financing option that many borrowers choose for quick expenses or debt consolidation. But before you move on to apply for an instant personal loan, it’s important to get a handle on what the monthly repayment will be. In this post, let’s look at how a loan calculator calculates EMIs and how it can be useful to know how to use it. 

The key numbers to know are the EMI, interest rates, and principal amount. The EMI is the fixed amount you’ll pay every month for the full tenure. It’s a monthly payment that includes both principal and interest. 

Knowing your EMI amount before borrowing allows you to make space for the EMIs in your regular monthly cash flow. Understanding the factors that determine your EMI can help you estimate the monthly repayment for any personal loan app India you are considering.

How Is The EMI Calculated? 

The EMI calculators make use of four key variables to assist you during your journey:

• The loan amount (the total amount you wish to borrow).
• Interest rate (the annual rate charged on the loan by the lender).
• Loan Period/Tenure (the duration of the loan in months).
• Processing fees (one-time fees charged by instant personal loan app).

Let’s take an example where you have to take a fifty thousand loan at a 10% interest rate for a 2-year tenure (24 months), and the processing fee is 2%. The EMI would be calculated as: 

• Loan Amount: Rs. 50,000
• Interest Rate: 10%
• Tenure: 24 months
• Processing Fees: 2% of the loan amount = Rs 1.000
• Total Interest for two years at 10% p.a. = Rs. 10,000
• Total Repayment Amount = Loan Amount + Total Interest = Rs. 60,000
• EMI = Total Repayment/ Tenure in months = Rs 60,000/24 = Rs 2500
• Amount Receivable = Loan amount – Processing Fees = 49,000

How To Use An Online EMI Calculator

Fortunately, you don’t have to do these calculations yourself. There are handy instant personal loan EMI calculators available on instant loan India apps that allow you to estimate your monthly installments quickly. Here are some tips for using an EMI calculator effectively:

• Enter the precise loan amount you need so the EMI reflects your actual repayment
• Adjust the loan tenure to match your repayment capacity and financial goals
• Play with different interest rates, as rates can vary across lenders
• Factor in any processing fees or other charges indicated
• Check the impact of a lower EMI by increasing the tenure and vice versa
• Use the preview or amortization schedule to see the breakup of principal & interest
• Compare EMIs across lenders at different interest rates

Conclusion:

With an instant loan EMI calculator, you can get a loan assist and a solid idea of the monthly repayment commitment before taking out a loan. This allows you to make an informed borrowing decision that aligns with your financial goals.

So be sure to use this handy tool as part of evaluating personal loan options. An adjustable EMI calculator gives you the flexibility to customize the loan to suit your budget.