Personal Loan EMI Calculator

Personal Loan EMI Calculator

Personal Loan is a multi-purpose loan which you can borrow to meet your immediate needs. Do you wish to renovate your house? Or fix a car or need some funds for a holiday?

Then Personal Loan would be a reliable instrument to source some funds. As personal is an unsecured loan, interest rate on personal loan is generally higher than home loan or car loan. Hence, you need to know your finances well in advance.

Personal Loan Calculator is a kind of tool which helps you to calculate your future monthly instalments assigned for re-payment of your Personal Loan.

With PersonalFN Personal Loan Calculator you can estimate your future EMIs. This will help you to budget your future finances and help you make responsible decision.

Formula for calculating Personal Loan EMI

The mathematical formula for calculating EMI is as follows:

P = Principal loan amount;

R = Rate of interest calculated on monthly basis i.e. (R= Annual rate of interest/12/100).

For instance, if R = 15% per annum, then R= 15/12/100 = 0.0125; and

N = the number of monthly installments.

For example, if you borrow Rs 5,00,000 from a bank at 15% rate of interest for a tenure of 10 years then,

How to use Personal Loan EMI Calculator?

PersonalFN Personal Loan calculator generates result in a split second and enables you to understand whether the monthly payment would be affordable for you.

All you need to input:

1. Personal Loan amount (in Rs)
2. Personal Loan rate of interest (percentage)
3. Personal Loan Tenure (in Months or years)

You can either use the slider or enter the loan values in the Personal Loan calculator table. As and when you change the input values the calculator will re-calculate and display the new result.

Personal loan calculator generates not only the EMI result but even tells you the total loan interest payable throughout the loan tenure. The pie-chart further shows the break-up of total payment of interest and principal amount. Hence, Personal Loan calculator can help you in planning your future cash out-flows

This in turn will give you a clear picture about the maximum loan you can afford.

PersonalFN believes that one may have EMI-to-income ratio of about 40% of the total household income.

Before taking a loan use our EMI calculator to make a prudent decision.

When to Take Personal Loan

Personal Loan is unsecured loan advanced on the basis of your credit history and ability to re-pay the same from your personal income. It is also called as consumer loan. Some of the reasons for applying for Personal loan are:

• Financing Education,
• Medical Emergency,
• Refinancing the home
• Business Expansion,
• Holiday/ Vacation financing
• Debt Consolidation,
• Build/ renovate house,
• Buy or fix a Car; and more

Re-payment of this loan happens in the form of fixed monthly/ quarterly instalments over the loan tenure. As there is no collateral there is higher risk involved and hence the interest rates are usually higher compared to secured loans such as home and car loan.

You re-pay your personal loan by paying monthly instalments. EMI stands for Equated Monthly Instalment which is an amount the borrower is expected to pay to the lender every month over the loan tenure. EMI consists of the interest cost and some part of the principal loan amount which you have to repay. This sum of principal and interest and principal amount is divided by the loan tenure i.e. the number of months to repay loan. This amount is commonly paid on monthly basis.

Hence, before you plan to opt for a personal loan look at other economical options.

Benefits of Personal Loan

• It is a multipurpose loan to meet all your aspirations
• Hassle free and quick loan approval process
• Less documentation
• Interest rate remains constant over the loan tenure
• Tenure is flexible between 12-60 months
• No security or collateral is required
• Loan is payable in easy monthly instalments

10 Important Factors to consider while availing a Personal Loan…

Here are some of the important parameters that any borrower should assess before signing on the dotted line…

1. Personal Loan Interest rate

   When you take a Personal Loan, the interest outgo is one of the vital deciding factors. The interest rate you pay depends on a variety of factors: your age, income stability, whether salaried or self-employed, number of years of work experience (in the current job/business/profession) and total), your credit score, existing EMIs (if any), and your repayment capacity, loan tenure, among other things. The interest outgo determines your EMI and has a bearing on your budget and long-term financial wellbeing. So, make sure you apply for best personal loan rates. It makes sense to compare personal loan interest rates across lenders and opt for a lowest interest personal loan.

2. Loan Tenure

   The maximum tenure for a Personal Loan is usually 5 years. But the shorter the tenure of a Personal Loan, the better it is.

   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)

   A higher tenure can reduce your EMIs, making repayments comfortable, while opting for a lower tenure (of say 2 to 3 years) increases your EMI; you pay a higher interest cost on the Personal Loan.

3. Processing fee & other charges

   Taking a Personal Loan does not end with interest rates; there are processing fees and other charges levied by lenders. The processing fee is a one-time fee charged as a certain per cent of the Personal Loan amount, but subject to a minimum amount. It varies from lender to lender. A higher processing fee impacts your total cash outflow while you apply for a Personal Loan.
   The other charges include: stamp duty (as per the Stamp Act), default interest rate on the overdue instalment, late payment fee, cheque bounce charges, duplicate interest certificate issuance charge, duplicate statement issuance charge, duplicate amortization schedule charge, issuance charge for photocopy of loan agreement/documents, prepayment charges (also known as foreclosure charges) and so on, all of which these should be examined carefully.

4. Repayment flexibility

   Apart from the above crucial aspects, assess if the lender provides you with the flexibility to repay your loan sooner, and what will this cost you. This flexibility can help you prepay the loan ahead of time, as well as provide a relief in distressing times. However, it’s best to adopt financial discipline in order to repay the Personal Loan on time and maintain your financial health in the pink always.

5. Customer service

   When you avail a Personal Loan in times of need, you wouldn’t want it to be an unpleasant experience, do you? Hence, ensure the customer service at the lender has high standards. This service can even help keep track of your loan, allow you to be in better control of your personal finances.
   Remember, while lenders will have varying customer service standards, there are some basics of good service that are universal.

6. 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.

7. 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.

8. 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.

9. 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.

10. Terms & conditions:

    Make sure you read the terms &condition carefully to make an informed choice. This will avoid issues later and ensure a pleasant, hassle-free experience.

Although your credit score is extremely important to apply for a personal loan, these 9 factors play a crucial role in selecting a bank and type of loan. As highlighted above a personal loan charges a high interest rate. It should be opted only as a last resort.

Here is a final checklist before applying for a personal loan

• Ascertain the amount you want to borrow.
• Calculate how much you can afford to make in repayments.
• Evaluate how long it will take to pay off, and how frequently you want to set the repayment cycle (weekly, fortnightly or monthly.)
• Will a fixed or variable rate personal loan suit you?
• Compare personal loans online, look for one with a lower interest rate and lower fees.
• Organise documentation and paperwork that is required to support you application and have this ready.

Eligibility criteria for Personal Loan

Different banks and financial institutions have different eligibility criteria. Some of the common conditions are as below:

Personal Loan is an ‘unsecured loan’, and banks conduct a thorough due diligence. They check your financial stability.

Moreover, the location you reside in, be it urban, semi-urban, rural area, pin code; type of residence (whether on rent, family-owned, or self-owned); and the number of years you’ve lived there are determining factors for a Personal Loan.

Banks will scrutinize your credit report; consider the credit score to judge your credit worthiness. Higher the credit score (of 750 and above), the better it is for you. As mentioned before, it can give you the power to bargain on the interest rate of the Personal Loan (which can reduce your EMI (or Equated Monthly Instalment) and/or ensure that your processing fee will be the least or even waived-off for a Personal Loan.

You can check your Credit Score for free at www.cibil.com. A credit score is a statistical number that depicts a person's creditworthiness. It offers a snapshot of his/her personal debt repayment history at a single point in time. It lets a potential lender know the risk that they are taking by lending you money. In general, higher the score; lower is the risk of default. Some of the credit information bureaus in India are CIBIL, Equifax, CRIF-High Mark, etc.)

Documents required for Personal Loan

1. Income statements
2. Salary slips and Form 16
3. Bank statements
4. Latest Income-Tax Returns
5. Credit report
6. Age proof (birth certificate, passport, Aadhaar card, voter id, PAN card etc.)
7. Address proof (Aadhaar card, passport, electricity bill, telephone bill, ration card, etc.)
8. Photo identification proof (Aadhaar card, voter id, PAN card, passport, driving license, etc.)

These documents need to be submitted with the Personal Loan application form along with two photographs. Once the Personal Loan is sanctioned, before disbursement, the loan agreement copy will be duly signed, and a standing instruction request / ECS mandate form and security deposit cheques are to be provided.

5 Points to bear in mind before you apply for a Personal Loan

1. Consider your needs and not the eligibility

   While you could utilize a Personal Loan for almost anything and your eligibility is high, consider your needs and not the eligibility. Such an approach doesn’t overburden and take a toll on your financial wellbeing. Hence, when deciding on the amount of Personal Loan, understand your monthly cash flows (cash inflow and outflow) by prudently drawing up a budget. This is a good time to be realistic with yourself, because nobody else knows your repayment capacity better than you. The objective is not to go overboard which can potentially jeopardise other long-term financial goals such as your retirement. Ideally, your monthly debt commitment should not exceed 40% of your gross income.

2. Keep your family in the loop

   When you’re planning to avail a Personal Loan, make sure you discuss it with your family. Sharing your rationale with them will keep them well-informed and their opinions will help you gain a better perspective. And to your surprise, in times of a short-term cash crunch, they may even come to your rescue. Whatever be the case, keeping your family in the dark may not be in their best interest.

3. Be organised in your documentation

   Once you’ve decided on the personal loan amount you require, organise your documentation and other paper work well, so that your personal loan application can be processed faster without going back-and-forth.

4. Have a repayment plan in place

   Missing to pay EMIs on Personal Loan can cost you more, owing to a higher interest on default, penalty, late fees, and other related charges. Therefore, ascertain the loan repayment schedule and have a repayment plan in place. Study your income flow and make sure it is consistent (and possibly growing). Account for emergencies, as life isn’t certain. The only way to mitigate risk is to have a contingency plan in place.

5. Ensure you hold adequate insurance

   As a bread winner, while you endeavour to do the best for your family vide Personal Loans, insure yourself optimally. God forbid, in case of an untoward incidence, the insurance money can cushion your family members with financial security and pay for the outstanding Personal Loan dues.

Now that you’re aware of all the facets to look at before opting for personal loan, watch this video to understand in detail: What Would Banks Check Before Granting You A Personal Loan