EMIs of several banks for different tenures

Aspects of an EMI

Your EMI depends on three important factors:

Interest rate: Higher the rate of interest, higher will be the EMI. For example, for a personal loan of Rs. 1 lakh from State Bank of India at 11% per annum interest rate for a period of 1 year, your EMI will be Rs. 8,838. While for the same personal loan for same period at 13% interest rate, EMI would be Rs. 8,932.

Loan term: Longer the loan tenure, lesser will be your EMI. If you choose to get a personal loan of Rs. 1 lakh from State Bank of India for 12 months at 11% interest rate, your EMI would be Rs. 8,838. And if you increase the loan tenure for 36 months for the same loan, your EMI would be Rs. 3,274.

Loan amount: The higher your personal loan, higher will be the EMI.

About EMI Calculator

Crunch the Numbers and Check Your Eligibility in 1 Minute!

Loans today have become a prerequisite at some phases of life. Especially, in this highly competitive and priced society, sectors like education and health fetch a considerable amount of money, which can bring a jerk in the daily financial commitments of a common man. So, what is the way out? To balance out the needs and the future plans, finance companies around the globe have come up with the concept of Loans, wherein EMIs are the easy way outs. EMI or Equated monthly Instalment, is the calculated monthly amount that is to be paid by the borrower to the lender, on a fixed date every month, over a proposed time period. The amount is evaluated with the purpose of paying off both the principal amount and the interest on it. To assess the respective finances, EMI calculator brings a further relief for the borrower by helping him to plan out a detailed chart of the expenses associated with the loan.

What is an EMI Calculator?

A personal loan EMI calculator presents a detailed chart from where a borrower can plan out all his expenses related to a personal loan. But, he needs to provide certain basic information related to the personal loan to it, before the calculator calculates the details desired.

Inputs to a personal loan EMI calculator:

Loan amount

This is the amount the applicant wants to borrow from the lender. The entire interest amount to be charged is calculated from this loan amount. The higher is this amount, the more will be the interest levied on the borrower and the more will be his EMI amount every month. The borrower needs to enter his preferred loan amount into the personal loan EMI calculator, in the appropriate space provided for the same.

Loan tenure

This is the time period before the expiry of which the borrower needs to repay the personal loan amount. Most of the lenders offer a range and the borrower can choose any time period inside that range to repay his personal loan. This tenure usually fluctuates between 1 to 5 years when it comes to a personal loan. The longer is the loan tenure, the more will be the interest accrued and the more will be his personal loan EMI outflow every month.

Therefore, you need to select the loan tenure in such a way that your EMI remains within the affordable range. The EMI calculator will surely help you to evaluate this. If after inserting a particular loan tenure into the EMI calculator, the personal loan EMI is found to be beyond the affordable range, you can change the tenure into a lower one and try again, till your personal loan EMI becomes affordable.

Rate of Interest

It is the rate offered to you at which the lender will charge interest on the personal loan amount availed by you. These rates may vary depending on your credit history and loan amount and in general from lender to lender. Therefore, you would do well to compare the personal loan offers from multiple lenders before making your final decision. The lower is the rate of interest; the lower will be your personal loan EMI.

You can always refer to the useful online platform of Afinoz which provides comparative insights to help you choose the best personal loan offer with the cheapest interest rates.

The output of a personal loan EMI calculator:

EMI calculator basically provides the borrower with three main outputs- the EMI, the breakup and the amortisation table. Evaluation of these three things helps in creating a transparent picture in front of the person and makes him decide his affordability for the loan.

EMI - This is the basic and most important resultant of the EMI Calculator, as this calculation yields the basic answer of how much amount is to be paid monthly to the lender, with the inclusion of interest on it. With this detailing, the borrower, can judge whether he can pay back the fixed amount in the said period, or he needs to alter the time period or the loan amount.

The breakup - This includes the various parameters on which final amount of EMI calculated for the month. This again is very crucial for bringing transparency in the loan deal as it highlights the interest rate, processing fee, principal amount and other finances involved in the process.

Amortisation Table - This computation charts out the advancement of the loan with the increase in time period. It basically tells how much a person would have paid back to the lender by the end of the year. Also, it clarifies the questions related to interest rates for the initial EMIs and the principal amount, all of which can be easily done in an EMI calculator.

How is the personal loan Emi calculated?

EMI calculation, brings a very detailed and futuristic information about the money borrowed and the money to be paid back at various stages of the loan tenure. The simple formula used by the EMI calculator is

E = P * r * (1+r)^n/((1+r)^n – 1),

Where, E is the amount to be paid at a fixed date of every month; the EMI.

P is the sum that is borrowed

r is the interest rate applicable, which is calculated on a monthly basis rather than the annual interest rate. This can be attained by applying the formula r = (annual interest/12) * 100.

n stands for the tenure of the loan in months, Such as 60 months for 5 years.

How and when can the EMI amount change?

Though, the EMI is meant to remain same during the entire loan agreement duration, but there are some situations on the basis of which, the EMI may vary.

The EMI of your personal loan is estimated by considering different factors associated with your personal loan and these include interest rate, loan amount and the loan tenure. In case of any change to any of these factors, your EMI amounts are also affected. We will discuss these factors here:-

First of all, in the case of change in interest rate, the amount initially calculated by the EMI calculator may differ from the sum that is to be paid at the variation time. This is generally applicable, when the borrower has opted for the scheme with a floating rate of interest, wherein, the changing repo rate of reserve bank is to be applied on the ROI of borrower’s loan. These changes may impact the loan EMI of the borrower either positively or negatively.

Secondly, in case, the borrower decides to pay a certain heavy amount during the loan tenure, the EMI automatically comes down, as the principal amount reduces considerably. However, such prepayments on a personal loan can be done only after a certain stipulated time, as determined by the lender. Also, lenders levy prepayment charges that vary between 1% to 4% of the outstanding loan amount of the borrower. For example, the HDFC bank levies prepayment charges at the rate of 4% of the principal outstanding if your loan tenure is between 13 to 24 months. The charge is fixed at 3% and 2% of the principal outstanding respectively if your loan tenure is between 25-36 months and beyond 36 months.

Some lenders even choose to waive this prepayment charge, subject to applicable terms and conditions.

Thirdly, in case of the change in the term of the loan, either it is increased or decreased, the EMI is meant to change in accordance to the months re-opted for the payment by the debtor. Such changes in your loan tenure can have a big impact on your personal loan EMI. Therefore, it is imperative for you to consider all factors and use the personal loan EMI calculator thoughtfully while calculating your EMIs. The longer your loan tenure is, the lesser is your EMI as compared to shorter loan tenures. When your loan tenure is shorter, the loan is ‘returned’ faster and understandably, the interest amount is lower as compared to longer tenure personal loans.

The below-mentioned example will make things clearer to you Mr. Manish Arora is looking to avail a Tata Capital personal loan of Rs 6 lakhs for a tenure of 4 years at the interest of 12.50% p.a. The table below shows his EMI, the interest outgo and the repayment amount at the end of every year.

Loan Amount Interest Rate Tenure Monthly Instalments Total Interest Amount Total Amount ₹ 6,00,000 12.50% 1 ₹ 53,450 ₹ 41,397 ₹ 6,41,397 ₹ 6,00,000 12.50% 2 ₹ 28,384 ₹ 81,225 ₹ 6,81,225 ₹ 6,00,000 12.50% 3 ₹ 20,072 ₹ 1,22,598 ₹ 7,22,598 ₹ 6,00,000 12.50% 4 ₹ 15,948 ₹ 1,65,504 ₹ 7,65,504

Also the graph below shows that the EMI to be paid by Mr. Manish for the Tata Capital personal loan will be significantly lower if the loan is availed for a longer tenure.

Lastly, there are schemes like Flexible EMI schemes, which allows the person to pay back the amount as per allowed by his pocket or with respect to the salary he earns. The change in EMI, here is in accordance to the changing salary of the debtor. Also, it is highly recommendable for the beginners who have just started with their career. Such flexible repayment options are designed to suit the varying needs of individuals at different stages in their careers. Step-up loans (where lower EMIs are paid initially and the same increases as the borrower goes through his career progression along the loan tenure) are more suitable for individuals at the initial phases of his career. Similarly, step-down loans (where higher EMIs are paid initially and the same decreases along the loan tenure) suit the needs of individuals close to retirement.

The best thing about a personal loan EMI calculator is that, when you use it, you can play around with the inputs you feed and can make your own permutations and combinations so as to reach at the best possible decision. Also, you can make informed decisions depending on important market fluctuations such as interest rate changes, as affected by the banks/NBFCs from time to time.

Therefore, it is advisable that you should have the above-mentioned facts in mind and use the personal loan EMI calculator thoughtfully – in order to extract the maximum benefit out of it.

Benefits of the Afinoz personal loan EMI calculator

Afinoz personal loan EMI calculator help you know the exact amount you need to pay every month towards the repayment of your personal loan. This allows you not to strain yourself financially and to avoid financial distress. Moreover, by feeding the inputs properly, you can even decide on an EMI amount that you can repay comfortably over your loan tenure.

Other important benefits provided by the Afinoz personal loan EMI calculator are as follows:-

You can access it 24*7

You can access the Afinoz personal loan EMI calculator anytime, from anywhere and as many times you want. You can access it from the comfort of your home, on the online platform of Afinoz.com. You no longer need to visit your lender personally or get indulged into complex mathematical calculations.

Get accurate results

Inadvertent mistakes or erroneous results may occur when you individually try to calculate EMIs on personal loans offered by different lenders. The online personal loan EMI calculator at Afinoz.com can help you to get error-free results just at your utmost convenience.

Allows you to plan your finances better

When you calculate your EMI with the Afinoz personal loan EMI calculator, you come to know beforehand about your exact money outflow every month towards the repayment of your personal loan. This allows you to plan sufficiently ahead for your finances so that the loan repayment does not hit your monthly budget. If you feel the monthly EMI outflow is going to give you a undue financial stress, you may tweak the loan parameters to reach up to your chosen EMI amount and fit your budget requirements accordingly.

Saves time for you

When you try to figure out your least possible EMI by comparing personal loans offered by different lenders, it takes a lot of your time and effort. You need to take a pen & paper and spend long hours while moving through those lengthy calculations. The online personal loan EMI calculator at Afinoz.com saves your precious time and does all the boring calculations for you in seconds. Here, you are at liberty to try out your own permutations and combinations regarding tenure, loan amount, and interest rates and make your own informed decisions regarding the best-fit personal loan for yourself.

How to decide on the right EMI amount for yourself?

The following tips would help you to decide on the right personal loan EMI amount for yourself-

Assess your current financial obligations: Before availing a personal loan, it is imperative for you to assess your expenses every month, including EMI obligations, if any. It will help you decide on the EMI amount you can pay to your lender comfortably on any given month.

Decide the loan amount to borrow: You need to estimate the personal loan amount you need well in advance. Being mostly of unsecured type, a personal loan often comes at high interest rates and we have seen that the higher is the loan tenure, the higher will be your EMI. Therefore, you would do well to limit the loan amount to a bare minimum.

Check your personal loan eligibility beforehand: Lenders actually assess your personal loan eligibility based on your perceived repayment capacity which is again derived from your monthly salary/income and other fixed obligations. Your personal loan eligibility is normally calculated by employing either of the 2 methods mentioned below:-

Multiplier method: This is the simplest method to calculate the personal loan eligibility. In this method, the lender applies a multiplier to your net take home salary. This multiplier is actually a function of your company profile (reputation, stability, size and annual turnover) and the take-home salary. If you earn a good salary and work in a company with a good reputation, this multiplier will be high enough and it will impact your personal loan eligibility in a positive way. It will also mean that you will be able to get the best personal loan rates too.

FOIR or Fixed Obligation to Income Ratio method: In this method, the lender considers the ratio of your fixed income to obligations. It ascertains the maximum EMI you can spend, with regard to your net monthly income and expenses (such as existing EMIs and rents). Usually, the lenders accept about 50% of your monthly income to be consumed by EMIs or other fixed obligations. If such obligations exceed further, the bank may either reduce the loan amount or may increase the loan tenure. You may also pay back some of the existing short-term loans so that the FOIR gets improved.

As a usual practice, lenders assess your eligibility with both the above-mentioned methods and then grants the lower of the two loan amounts thus calculated to you.

FAQs related to Afinoz personal loan EMI calculator

Q) What is the loan amortization schedule?

Ans) It is a computation that tabulates the systematic arrangement of the personal loan payment process. A loan amortization table provides you with a clear picture of the amount you need to pay towards both the principal payoff and the interest accrued, at the end of a particular time duration, say, a year. It also clarifies all the doubts related to the principal amount and the interest rates for the initial EMIs, all of which can be easily done in an EMI calculator.

Q) How can a personal loan EMI calculator help me to make the best choice?

Ans) The Afinoz personal loan EMI calculator not only determines your loan EMI but also lists the best personal loan offers, depending on your requirement and eligibility. Using our personal loan EMI calculator, you can compare personal loan EMIs for loan offerings from different lenders. This will allow you to make informed decisions, according to your requirement and monthly budget estimates.

Q) Is my EMI obtained from the personal loan EMI calculator any different from the one calculated by the banks?

Ans) The personal loan EMI you obtain from the personal loan EMI calculator is the result of your inputs (interest rate, loan tenure and loan amount). A lender or bank may feed different values of these parameters as inputs while calculating your personal loan EMI. Therefore, the EMIs from these two sources may come up with slightly different results.

Q) Which one gives more accurate results, EMI calculators or excel sheets when it comes to personal loans?

Ans) Both EMI calculators and excel sheets can give accurate results when it comes to personal loans. But, when you use online EMI calculators while calculating personal loan EMIs, you do not need to go through the hassles of those tedious calculations. EMI calculators produce your EMI within a few seconds but you may need to invest more effort and time in obtaining your EMI in an excel sheet calculator. This is the reason why online EMI calculators are used more often to calculate personal loan EMIs.