The focus while borrowing should be on the repayment of the loan. That is how a strong credit background and future financial opportunities open up. A personal loan is no doubt the best thing to rely on, in a time of crisis. However, it has strong eligibility criteria and the approval process is not as easy as it seems to be. The entire borrowing process is a lengthy one with so much to consider and work on. Things like approval, eligibility, repayment, EMI calculations, everything matters. After you have borrowed an amount of Rs. 20 lakhs, you need to think about the EMI. The EMI is the monthly installment scheme for loan repayment. It is a vital aspect and often becomes a burden if not chosen in the right way. An EMI amount contains the principal amount and the rate of interest, along with various charges. If you supposedly borrowed 20 lakhs, you must know how to calculate and why to use a personal loan calculator for doing so. Here is how you can calculate and why you should calculate an EMI before you take a loan.
What is an EMI?
An EMI is an equated monthly installment that is payable to the loan provider by the borrower every month. To ease up the repayment, the entire amount of the principal loan along with the rate of interest is calculated with the loan tenure. This calculation will give a small amount that a borrower needs to pay every month on a fixed date. An EMI scheme was introduced to ease the burden, but a wrong decision regarding EMI can bring on more burden. This is why a low personal loan interest rate and using a personal loan calculator become very important. If you have taken a loan of 20 lakhs, you need to use a calculator and then calculate the EMI using the formula. This will give you your monthly EMI accurate amount within a few seconds. Find out the formula and usage of a calculator.
The formula for calculating EMI
There is a fixed formula that is used for calculating the EMI amount. A personal loan calculator makes the calculation easy because a loan includes large digit numbers and percentages. A slight human error can make a big difference. Here is the formula:
Principal loan amount+rate of interest/number of months in tenure
- Principal loan amount: 20 Lakhs
- Tenure: 5 years (optional)
- Rate of interest: 15% pa
Now, you need to calculate the amount of total interest on your principal amount for 5 years at a rate of 15% annually.
- 20,000, 000 + 15%/60 months = EMI for every month up to 5 years.
Why calculate EMI?
An EMI is a monthly obligation that gets added to your daily fixed obligations and expenses. It needs to be decided and then taken. If you know your capacity to adjust an EMI to your income by accommodating all your other expenses, you will decide right. If you are capable of paying a small EMI amount, you should go for a long-term personal loan. To finish off a loan within a short period of time, you need to pay a high EMI amount to close it soon. With the right EMI, a loan will never become a burden on you. You need to choose the right principal loan amount and the tenure and look for the best personal loan interest rate. This will give you a smooth borrowing experience without making it expensive.
Benefits of using an EMI calculator
Know your EMI: When you use a personal loan calculator, you can easily know your EMI before you visit your loan provider. This helps you to know and adjust the amount. You can decide the loan amount and tenure based on the EMI that you can afford. All of these should be done before visiting your loan provider so that you know the borrowing amount, tenure and EMI.
A Calculator will help you compare the best loan providers online on the basis of the rates, tenure, loan sanction amount, rate of interest, eligibility and approval time. When you use a personal loan eligibility criteria calculator, you can easily calculate the amount that you are capable of getting from a financial institution. This makes it easy for you to decide.
Accurate and instant: When money is involved, accuracy plays a vital role. Even a 0.5 error can make a huge difference. You should use a personal loan calculator to get instant and accurate results. It is very easy to use and gives 100% accurate results.
Wrapping up
Always be careful while borrowing an instant personal loan. Make the best use of the loan by maintaining the right eligibility and borrowing the right amount at the lowest rate of interest.
Author Bio
