A guide to understanding the functions of a personal loan EMI calculator

Dreams are the motivational drive for a person to live a successful and calm life. They energise the mind and body to achieve the desired results. Life becomes meaningless without dreams and goals. A person can excel in whichever field they desire and outperform others.

Many people cannot afford to pay the full amount for things that they purchase like a car, a house, wedding expenses, educational expenses, etc. With an abundance of loan options across the country, people can buy or fund anything they want. They have the liberty to use the personal loan EMI calculator for calculating their current expenses and saving for the future.

EMI is an abbreviation of Equated Monthly Installment. It is the amount that the borrower pays to the lender every month. It consists of three components – the rate of interest, the principal amount, and tenure. These calculators help borrowers understand the structure of their monthly payments. They help determine the EMI that the loan borrower is liable to pay by accounting for the loan amount, preferred tenure, and chosen interest rate.

Understanding the calculator

The personal loan calculator helps calculate the monthly loan payments against the income and expenses of the loan borrower. The loan tenure is usually between 2 to 5 years, but the majority of the individuals prefer longer loan durations for higher loan amounts. But, they would also lead to higher interest payments. Select a loan amount that meets all the specific financial goals and nothing else.

Figuring an affordable loan amount

These calculators help choose the loan amount within the borrower’s repayment capacity. For higher EMI amounts, increase the principal amount. Maintain a low debt-to-income ratio. Banks do not sanction EMIs over 60 per cent of the income earned by the individual.

Accurate calculations

The personal loan calculator in India provides a set of formulas to calculate the EMI within seconds automatically. Manual calculations are complicated and prone to errors. The tool provides accurate results for sustainable financial planning. Adjust the tenures, principal amounts, and interest rates to find a suitable repayment scheme within capacity.

The formula used for calculation

The EMI calculator for a personal loan calculates the instalment using a simple formula:

EMI = Principal or Loan amount + The Rate of Interest on the loan

The mathematical formula is as follows:

EMI = P x R x (1 + R)n/[(1 + R)n-1]


P = The principal loan amount

R = The rate of interest (calculated monthly)

N = The number of monthly installments

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