How Does a Personal Loan EMI Calculator Work?

You can calculate your EMI online with financial tools like a personal loan EMI calculator and plan your loan repayment efficiently. The personal loan interest calculator allows you to calculate the interest payable and the EMI that you will need to pay.
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The tool will calculate the exact amount due once you have selected the loan amount, repayment term, and applicable interest rate. This will show you the total interest rate payable on the loan amount for a given tenor.

What is EMI and How Does It Work?

The Equated Monthly Instalment, or EMI for short, is the monthly amount that is due to the lender each month until the loan amount has been fully paid. The initial month’s interest portion of the EMI will be higher and decrease with each subsequent payment.
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The interest rate will determine the exact amount of principal to be paid. Your monthly EMI payment will not change, but the percentage of principal and interest components will fluctuate over time. Each successive payment will result in a decrease in interest and principal.

How to Use a Personal loan EMI Calculator?

The following information should be entered into the personal loan EMI calculator to obtain the required results.

  • You can choose the principal loan amount (rupees).
  • Lending term (in months, or years)
  • Rate of interest (percentage).

Calculation of Floating Rate EMI

The two components that make up the EMI, loan amount and tenure, are yours to control. You will decide how much money you need and how long you should borrow. The banks and NBFCs decide the interest rate based on RBI rates and policies. You should be aware of the extremes of an increase or decrease in interest rates and calculate your EMI based on these conditions. This calculation will allow you to determine how much EMI you can afford, how long you should loan for and how much to borrow.

  1. Optimistic (deflationary): Consider that the interest rate drops by 1% to 3% from its current rate. This scenario is how you can calculate your EMI. This situation will allow you to reduce your EMI or shorten the loan term. Ex: You can compare your home loan with other investment options if you use it to buy a house.
  2. Pessimistic (inflationary): Assume, in the same manner, that the interest rate is increased by 1% to 3%. It is possible to continue paying the EMI without too much difficulty. A 2% increase in the interest rate can cause a significant increase in your monthly payments for the entire loan term.

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Important Factors to Consider:

  • Processing Charge: Some loan providers charge a processing fee. This one-time cost can make the loan more expensive. It doesn’t matter if you get a low interest rate, it is worth comparing the processing fees charged by different lenders.
  • Pre-Closure Fees: Some banks may charge a pre-closure fee for you to repay your outstanding loan balance prior to the end of the loan repayment term. Check to see if the bank/financial institutions you are applying to, imposes a pre-closure fee.
  • Customer Service: A lender with good customer service is essential for a positive borrowing experience. Before you submit your loan application, make sure you check out the available customer service channels and how prompt they are in responding to your needs.
  • Time to get a loan: If you’re looking for a personal loan to cover an immediate need, you should consider the loan disbursal timing. Most banks and financial institutions will disburse the loan amount in a matter of minutes.
  • Additional Charges: Although the interest rate may be higher, the lender may not charge you any additional fees. However, you might be able to lower the total cost of the loan by lowering the check/EMI bounce. Instrument return charges and stamp duty charges. Before you apply for a personal loan, compare all charges.

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Before applying for a personal loan, it is a smart idea to calculate your EMI. You can calculate your EMI manually, but a personal loan EMI calculator will give you a better estimate. An interactive chart allows you to select the loan amount, tenor, and interest rate to calculate the exact payable EMI.


Alinamass is a General Blogger & writer who has been extensively writing in the technology field for a few years. He has written several articles which have provided exciting and knowledgeable information on Finance, Business, Tech, Travel, Sports in Italy. Boost up your marks with GoTo Assignment Helper service has proved to be one of the most successful services.

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