Personal Loan EMI Calculator

When borrowers stop paying the EMI, the banks will term their loan accounts as non-paying assets (NPA) after a certain period. 

Additionally, they will report the same to the credit bureaus. Missing EMI payments for a long duration will negatively impact your credit score and make it very difficult to avail loans in the future.

A personal loan EMI calculator, apart from being very easy to use, comes with several other benefits, such as -

• You can find out the exact amount of EMI you have to pay in just a few seconds

• You can use it to compare loans from different lenders and choose the best option for you

• It simplifies loan planning by providing you with the entire amortization schedule

• The values are accurate and consistent without any errors

• Saves you time

The reducing balance method calculates interest based on the outstanding principal loan amount. Customers benefit from this method because they have to pay less interest as the loan tenure progresses because interest is calculated based on the outstanding principal loan amount. The depreciation rate percentage is applied to the asset's decreasing balance.

Here is how you can calculate EMI in the Reducing Balance Method

EMI = [P x Ix (1+I) ^T]/ [((1+I) ^T)-1)]

where

P = principal amount

I = rate of interest / (100×12)

T =  number of years x 12

Here are simple ways to reduce your EMI:

• When you purchase an item, pay a higher amount of down payment so you can reduce the monthly installments
• Opt for a longer repayment tenure
• Negotiate a lower rate of interest with your bank 
• Make part prepayments (if accepted) to reduce loan burden

Customers must note that there are generally two ways to change/reduce the amount paid towards EMI. Either pre-payment must be made on the loan which will reduce the amount to be repaid or the borrower must negotiate with the lender for an extension of the repayment tenure or to reduce the interest imposed.

The type of interest rate you choose will have an impact on your EMI. Here are some of the features of these interest rates -

• Floating rate of interest changes with market fluctuations and the fixed one stays the same throughout your tenure.
• Floating rates tend to be lower.
• If you are sure rates will rise, choose the fixed rates. If unsure, choosing the floating rates will be better.

Ans: Your EMI will depend on three factors -

• The amount being borrowed

• Rate of interest

• Repayment term

In this case, let us assume that your rate of interest is 16% per annum with a repayment term of 8 months. The easiest way to find out your EMI is to use the Money View Personal Loan EMI Calculator. 

Using this calculator, the EMI for 2 lakhs personal loan is Rs. 26,523 with the interest amount coming up to Rs. 12,185.

The EMI on your Rs.10 Lakh personal loan will be based on your tenure and the rate of interest. 

For example, if you have taken a Rs. 10 lakh loan with an interest rate of 16% and tenure of 48 months, your EMI amount will be Rs. 28,340 per month.

A loan is repaid in the form of monthly payments known as EMI or Equated Monthly Installments. This amount comprises the principal and interest components and will depend on the amount borrowed, interest rate imposed, as well as repayment term.

EMI can be calculated in two ways -

• You can either use the formula given above

• You can use the Money View Personal Loan EMI Calculator online

The easiest way to calculate the interest component of an EMI is to use an easy calculator such as the Money View Personal Loan EMI Calculator. All you need to do is input the required information, and you’ll find out the interest amount that you will have to pay.

For example, Vijay wants to avail a personal loan of Rs. 40,000. The interest rate charged will be around 17% per annum (determined by the lender) and the repayment term is 6 months.

He inputs these details into the Money View rate of interest calculator. Based on the calculations, his monthly EMI will be Rs. 7,007 and the interest component comes up to Rs. 2,007.

In order to calculate EMI in Excel, you will need to use the following formula -

=PMT(RATE,NPER,PV,FV,TYPE)

Where 

• RATE stands for rate of interest applicable on the loan

• NPER is the total number of monthly installments/ loan tenure

• PV represents present value/ loan amount/ principal amount

• FV is future value or cash balance once last payment has been made. This can be omitted and the value will be counted as zero (0).

• Type is zero (numerical 0) or 1 – this indicates when the payment is due. If payment is due at the end of the month, the type will be equal to zero. If the payment is due at the start of the month, then the type will be set as 1.

This way, using the above formula, you can easily use Excel to calculate your EMI.