EMI Calculator

Planning to take a loan? Use this simple EMI calculator to estimate the monthly instalment payable. Simply provide the loan amount, the loan tenure and the interest rate of the loan and the calculator will work out the loan Equated Monthly Instalment (EMI). The interest rate considered is on a reducing basis. You can use this calculator to calculate the EMI of any loan be it—personal loans, car loans, two wheeler loans, home loans, consumer loans etc.


Loan Amount: Rs.

Interest rate: %p.a.

Tenure: Months


Total Payable Amount:

Principal Amount:

Interest Amount:

Emi:

Rs.

Rs.

/p>

Rs.

Is your EMI affordable?

The sole reason for using an EMI calculator to calculate your loan instalment is to understand whether the monthly payment is affordable. It is essential to opt for a loan with an EMI that is well within your budget. You do not want to create a debt burden for yourself. You see, loans create an obligation on the buyer to pay regular EMIs. EMI affects an individual’s cash flow in a big way as usually very less savings remains after having accounted for EMIs and expenses for investment purpose to meet other short and long-term financial goals.

 

Taking a loan and paying an EMI may sound rational as you can still meet your expenses comfortably. But this is where you need to be cautious. You might be meeting your expenses today but you also need to make sure that you would be able to do so even in future. As the life stage changes expenditure patterns also change. This is where forecasting comes into picture. PersonalFN believes that one may have EMI-to-income ratio of about 40% of the total household income.

 

Before taking a loan, assess your monthly income and expense, see how much additional outflow you can afford to have on an EMI, and accordingly decide how much loan you can comfortably handle.

 

What should you look into while availing a home loan?

Given the real estate prices these days and the amount that needs to be invested, buying a house is the biggest investment decision one can take. Though affordability is difficult at times, Home Loans can be a good instrument to help you purchase this asset.

 

However, ask any person how they would choose the financial institution to approach for this home loan and the only criteria that comes up for discussion is the one offering the cheapest home loan rate! No doubt interest rates matter, but it shouldn’t be the only criteria especially when a home loan is going to be the longest debt in our lives.

 

While purchasing a house, the home loan would be able to provide only 80% of the agreement value of the house, the balance 20% is allocated from one’s savings, investments, etc. Moreover, when the EMIs run across 15 to 30 years, it may put a strain on not only your savings but your other financial goals as well. Make sure you have a well-constructed financial plan in place allocating the right resource for achieving the goal.

 

What factors are considered when availing a personal loan?

Look at some important parameters that you should assess before signing on the dotted line—

 

  1. Interest rate: All personal loans are unsecured. So, the interest rates are higher compared to other secured loans (i.e. home loans, car loans etc.). The interest rates are in the range of 11%-25% p.a. The period ranges from 1-5 years.

    The table below indicates the total cash outflow cost for a personal loan of Rs 15 Lakh. The period of the loan is assumed as 5 years. 
  2. Loan amount (Rs)

    Interest rate

    Term of the loan (years)

    EMI (Rs) (rounded off)

    Total cash outflow (Rs)

    15,00,000

    11%

    5

    32,614

    19,56,840

    15%

    35,685

    21,41,100

    20%

    39,741

    23,84,460

    25%

    44,027

    26,41,620

    (Note: The above table is for illustration purpose only)
    (Source: PersonalFN Research)

     

    A higher interest rate is a burden on one's wallet, evident from the table. So ideally, opt for a personal loan with a competitive rate.

     

  3. Repayment flexibility: In addition to the regular repayments on your personal loan, it is useful if it allows additional lump-sum repayments. This flexibility helps in repaying the loan ahead of time. Avoid signing up with an institution that penalises early repayment.

  4. Processing fees: Processing fees change from bank to bank. Some banks charge a fixed fee, while others charge a percentage of the approved loan amount. There are some banks which don't charge a processing fee at all.

    A higher processing fee impacts the total cash outflow. And should be borne upfront whether you end up taking the loan from the bank or not.

  5. Good customer service: Can you access your personal loan details online? This will enable you to keep track of the loan/s and perhaps, allow you to be in better control of your finances facilitated by additional repayments. Besides, evaluate if queries on your account are answered efficiently. While borrowers will have varying customer service standards, there are some basics of good service that are universal.

  6. Period of the loan: The shorter the loan tenure, the better it is. The table below total cash outflow under different periods.
  7. Loan amount (Rs)

    Interest rate

    Term of the loan (years)

    EMI (Rs) (rounded off)

    Total cash outflow (Rs)

    15,00,000

    15%

    1

    1,35,387

    16,24,644

    2

    72,730

    17,45,520

    3

    51,998

    18,71,928

    4

    41,746

    20,03,808

    5

    35,685

    21,41,100

    (Note: The above table is for illustration purpose only)
    (Source: PersonalFN Research)


    Looking at the table, a layman may choose a personal loan for a 5 year term considering a smaller EMI. But you would be paying a higher interest cost with a longer term in play. Therefore, the total cash outflow would be higher as the term increases.

  8. Salary: A salary highlights the repaying capacity of the borrower. A lender requests a borrower to furnish the latest salary slips. A salary is considered adequate based on the loan applied for, expenses, outstanding loans (if any), and the city of residence, etc.
  9. The company you work at: Almost all Indian banks categorise employers based on size and popularity of the company. If your employer falls under the highest category, you may be eligible for a higher loan amount at a lower rate of interest and vice versa.

  10. Job Term: Banks and other lenders may analyse the time period you have been working at the current job and even the number of years of work experience. A higher time span in your present job may work in your favour while procuring a loan. Lenders may also visit your employer to verify your details.
  11. Your current economic life cycle: A bank may not be hesitant in granting you a loan if you are settled and future prospects of earnings are bright, plus if you are residing in your current house for long.

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