EMI is the amount of money a loan borrower needs to pay every month to the debt provider. This amount consists of the interest rate of the loan, and a personal loan calculator is an ideal way of determining the EMI.
An EMI is a fixed amount that borrowers pay to the lenders for clearing the outstanding loan under a stipulated tenure. However, certain factors influence the EMI amount. Moreover, multiple personal loan bank list follow their personal loan calculator to quickly find out the monthly instalment a specific borrower needs to pay.
In this blog, you will understand the critical aspects that influence EMIs and how a personal loan calculator helps determine the monthly loan repayment amount.
Factors Affecting EMIs of Personal Loan
A personal loan is generally preferred by many borrowers because of the simple loan application process. However, it is necessary to consider certain factors before applying for a personal loan. Moreover, these factors play a significant role in getting the EMIs through a personal loan calculator.
- Principal amount of loan
This is the amount of money a borrower seeks to get as a personal loan. This amount depends on the fund needed by the borrowers to fulfil their requirements. Therefore, a higher principal amount in a personal loan calculator means a higher EMI.
- Personal loan tenure
This is the duration of months or years for which a borrower wants to get the loan. If a borrower asks for a personal loan for higher tenure, the EMI of this loan will be lesser. Therefore, in a loan calculator, the tenure inversely affects the EMI amount.
- Rate of interest
This is the amount of interest a lender seeks from the borrower to repay the loan. The interest rate varies with loan providers. In addition, a single lender charges different rates from different borrowers. The difference depends upon the credibility of the borrower. Moreover, in a loan calculator, a higher rate of interest means a higher EMI amount.
EMIs For Loan Calculation
A loan calculator considers three factors for determining the amount of EMI that a borrower needs to pay. Moreover, the mathematical formula of a loan calculator is given as follows:
EMI = [P x r x (1+r)^n]/[(1+r)^n-1]
In the above formula of the personal loan calculator, P represents the principal amount of the loan, and r is the interest rate charged on the personal loan. While n stands for the tenure of loan repayment. The personal loan bank list considers monthly tenure in the personal loan calculator.
Benefits of Personal Loan Calculator
The personal loan bank list uses the loan calculator to determine the amount of EMI their borrowers need to pay. The primary benefits of using the loan calculator are listed below:
- Lenders don’t need to pay any charge for using the loan calculator.
- It saves the valuable time of borrowers by simplifying the calculator of EMIs. Moreover, manual EMI calculations can give a wrong result while calculating EMIs.
- It informs the borrower about the EMI amount before taking a loan which helps them decide the feasibility of loan repayment.
- The loan calculator also provides legit information in the form of graphs and pictures, which consists of tenure, outstanding principal, interest rate, etc. The pictorial representation offers a clear demonstration of EMI.
A personal loan calculator is an automated tool that efficiently determines the EMI borrowers need to pay for their loan. Borrowers prefer a personal loan bank list that uses this tool because the chances of incorrect EMI calculation are negligible. Moreover, it helps borrowers decide if they can repay the loan amount on time. Therefore, if you are planning to take a personal loan, you must use an automated EMI calculator to figure out the EMI amount for your loan in advance.