Personal loan is one of the highly accessible products if you are looking for instant financial help. With swift disbursement, zero security requirement, online accessibility features, availing such loans probably is the smartest medium to acquire funds in emergency times. Usually, they are repaid in the form of EMI, which is nothing, but a fixed monthly payment distributed equally throughout your selected repayment tenure. Having a fair knowledge about your personal loan EMI repayment as per your repayment capacity is a healthy practice. This reduces your chances of EMI defaults in future due to aggressive repayment schedules.
Now, you might be wondering how to calculate your personal loan EMI. Well, before this, check out the factors affecting personal loan EMI amount.
- Principal: EMI is directly proportional to principal amount. This is the amount that you will borrow. Note that a higher principal will lead to a higher EMI.
- Interest rate: Personal loan interest rateis the component that you will pay to the lender for the borrowed loan. EMI is directly proportional to the interest rate. This means higher your personal loan interest rate, higher will be your EMI.
- Repayment tenure: Repayment tenure is the time-period across which you need to clear the loan. A higher repayment tenure means lower EMI but higher interest outgo while shorter tenure leads to higher EMI but reduced interest outgo.
Find out how you can calculate your EMI on personal loan:
Before you hit the personal loan apply button on any lender’s site, ensure to follow a step-by-step process to select the right lender and calculate the EMI as per your potential to repay. Also, see if the terms and conditions of personal loan online or offline is in match with your requirements.
- Fix your loan amount requirement
First, decide the loan amount you need to avail through a personal loan. In case you have any low yield investments not linked with any financial goals generating lower returns than the expected personal loan interest rate, then you can consider redeeming it. Doing so may help you avail some fund for your emergency, which in turn will lower your loan amount requirement through personal loan. Opting for a lower loan amount may increase your chances of availing a loan as it lowers the lender’s credit risk.
- Compare amongst lenders
Before zeroing upon any lender, it is crucial to conduct an in-depth research and compare amongst lenders across different parameters to choose the best deal. Avoid blindly selecting a bank/NBFC nearest to your home or with whom you share a relation or where you are getting the lowest interest rate. Lower interest rate does not mean it is providing the loan at reduced cost. Along with personal loan interest rate, consider other parameters like prepayment charges, processing charges etc. before selecting a lender. Ensure to take the help of online financial markets to compare among the available offers. These platforms assist by matching you with an apt lender as per your need and eligibility.
- Select the repayment tenure wisely
Loan repayment tenure plays an important role in determining your EMI outgo. There is no ideal figure determining your repayment tenure. It differs from one applicant to another based upon your repayment capacity. While shorter repayment tenure results in higher EMI, it also leads to lower interest cost and vice versa. Keeping your EMI at a comfortable and manageable level without burdening your finances is a smart move for any personal loan seeker. Your EMI outflow must be such that it does not lead to any negative impact on your long-term financial goals and investments. In case you can afford to repay your loan instantly without burdening your savings, monthly investments, and expenditures, you might choose a shorter repayment tenure to save interest cost.
- Use the personal loan EMI calculator to know your EMI
Personal loan calculator is a valuable online instrument to know how much your overall EMI will be. This is extremely simple to use. All you need to do is, enter your loan amount, personal loan interest rate and choose the repayment tenure. The personal loan EMI calculator will present you with the calculation in a second. Usage of personal loan EMI calculator saves time, provides instant results, and aids your planning.