We live in an age where people are not skeptical about taking loans anymore to meet short-term and long-term goals.
Taking credit or loans is commonplace now and if you’re thinking of Personal Loan rate of interest, an EMI calculator can help you in various ways. Be it buying a new house or renovating your present one, planning a wedding, going for a holiday, or completing your education. Unlike secured loans such as auto, education, or home loans, a Personal Loan is more convenient because it does not require collateral.
Nowadays, it has become effortless to get a loan as banks and financial institutions have introduced easy and comfortable processes for application, making Personal Loans easily accessible, and on short notice.
EMI and Personal Loans
Once you get a Personal Loan, you must understand the repayment procedures and ensuing EMI. A Personal Loan rate interest calculator is available to clear any confusion and specially designed to help you pay the correct amount of equated monthly instalments (EMI). Details like tenure, loan amount, and the interest rate are required to calculate the EMI amount.
You can access EMI calculators at the websites of financial institutions and banks and on various other financial websites.
How do EMIs Work?
Equated Monthly Instalments or EMI is crucial to your loan repayment procedure. When borrowing the loan amount from a lender, you agree to bear the interest rate on the amount loaned to you. The interest is charged to reimburse loaners because of the risk they are taking by lending you money.
You agree to return the borrowed amount plus interest over a pre-scheduled period when borrowing the money. This period can be anywhere between a few months to five years. The Personal Loan process steps include repayment, which takes place every month, through the loan tenure.
EMIs consist of a part of the principal amount and a segment of the interest. After the repayment of one instalment, the interest rate is counted on the rest of the principal amount.
What are the Factors That Determine the Personal Loan EMI?
Factors affecting Personal Loan EMI –
- The total amount of the borrowed money
- The rate of interest on the loan
- The total period for the repayment of the loan
The first determinant of EMI is the total amount borrowed. The amount of EMI depends on the amount of loan borrowed. Interest rates also depend on the same factors.
The tenure of the loan has an antipodal relationship with its EMI. If the period to pay back your loan is long, the EMI will be lower in that case. But remember that the more the tenure, the more interest your will have to pay, which adds more to your total borrowed amount.
The Formula Used for Calculating The EMI For A Personal Loan
[P*R* (1+R)^N]/[(1+R)^N-1]
P= The total amount borrowed (Principal Amount)
R= The Rate of Interest
N= Total tenure of the loan
For the Personal Loan process steps, an EMI calculator is always preferable to be extra sure about the EMI you will pay.
Using Personal Loan EMI Calculators
It is quite accessible with a simple interface. You don’t require technical proficiency in using it. Fill in the loan amount, interest rate, and the period you want to repay the loan. After the entry, the EMI calculator will automatically calculate your EMI.
Documents required for personal loan application
- Identity proof (Passport, Aadhar card, voter ID, driving license)
- Proof of Income (account statement and salary slip for the last three months)
- Residence proof (Ration card, passport, Aadhar card, utility bill)
- PAN card (Permanent Account Number)
- Passport-size photographs
- Properly filled application form
Every month the EMI will be deducted from your linked bank account. If you fail to pay the EMI, extra charges will be inflicted on you. Read the article and make the most of the Personal Loan rate of interest calculator.
