The most popular form of financing in the Indian debt market is personal loans. In India, this category includes more than 78% of all loan applications. Banks, credit unions and online lenders all have the power to provide personal loans. Personal loans are a standard option for potential borrowers because they don't demand collateral and are disbursed instantly.

You can take personal loans for various things, including trips, unforeseen expenses, business expansion, and higher education. But, before applying for a personal loan, several crucial elements must be considered, including interest rates, ability to repay, and loan tenure.

What is a Personal Loan EMI Calculator?

When you seek out a personal loan, you must repay the principal amount borrowed over time, along with a specific percentage of interest. You can calculate the monthly amount you must pay using a personal loan EMI calculator.

It would be best if you used an online calculator to determine the EMI before applying for a personal loan so that you are aware of the monthly payment you will be required to make for the duration of the loan. In addition, this calculation will enable you to comprehend personal loan EMIs' effects on your spending capacity and lifestyle.

What are the Reasons to Use a Personal Loan EMI Calculator?

Calculating personal loan EMI manually could be efficient and generate accurate results. Thus, using a personal loan EMI calculator is recommended. Some of the key benefits of using an EMI calculator are listed below: 

Strategically Plan Your Monthly Budget 

You can ascertain the exact amount you must pay each month once you calculate the EMI amount payable on your loan. As a result, you may easily plan out all of your monthly expenses during the tenure and incorporate monthly EMIs.

Make Decisions by Changing the Factors Affecting EMI Amount

The loan amount, monthly interest rate, and tenure determine your EMI amount. However, using an EMI calculator, you can experiment with various loan amounts, terms and interest rates. This calculator will help you choose the appropriate loan amount without impacting your lifestyle or financial situation.

Maintain a Healthy Credit Rating

Calculate your EMI before applying for a personal loan so that you are ready to manage your finances and make timely payments on the loan. As a result, you will be on time for any EMIs, preventing you from having a bad credit rating.

Saves Time and Provide Accurate Results

The personal loan EMI calculator performs all the complex calculations within seconds, saving significant time. Conversely, when you perform analyses manually, there is a risk of inaccuracy.

How does an EMI Calculator for Personal Loans Work?

A standardized mathematical formula is used to calculate the personal loan EMI amount. The online tool will quickly compute the EMI amount once you enter the necessary principal loan amount, interest rate and period.

The formula used is:

EMI amount = [P x R x (1+R) ^N] / [(1+R) ^ (N-1)]

wherein,

• "P" indicates the principal or loan amount
• "R" stands for the monthly interest rate 
• "N" denotes the number of monthly EMIs or the duration of the loan in months

Quick Wrap Up

Personal loans are becoming one of the most commonly utilized financial products. As a result, lenders have observed a significant growth in the distribution of personal loans over time. However, like other financial decisions, you must only undertake a personal loan after careful consideration of all factors.

A personal loan is a financial burden that may directly or indirectly affect your finances and lifestyle. Because of this, before applying for a personal loan, you must clear any confusion by using an EMI calculator.