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Personal Loan EMI Calculator

Loan Amount

Enter value between 25K and 10 Cr
25K 10 Crore

Tenure (Years)

Enter value between 1 and 30
1 30

Interest Rate (P.A)

Enter value between 1 and 20
%
1 20
Monthly EMI
17,761
Principal Amount
16,00,000
Interest Amount
₹ 9,57,568
Total Payment
₹25,57,568

All about Personal Loan Calculator Explained

What is a Personal Loan EMI?

personal loan emi

What is a Personal Loan EMI?

A personal loan is an unsecured credit instrument. An individual can utilise it for several purposes, like house renovation, weddings, travel, medical treatments, and other immediate financial needs.

Now, what is a personal loan EMI?

Equated monthly instalments or EMI for a personal loan refers to the amount payable monthly after one acquires a personal loan. This EMI amount is used for paying off both the loan interest and principal amount over the tenure until the entire loan is paid off. The personal loan EMI remains the same throughout the tenure.

What are the Factors Affecting Personal Loan?

Following are the three factors that affect the personal loan EMIs:

principal loan amount

P refers to principal loan amount

The EMIs payable are directly proportional to the personal loan amount. The greater the loan amount, the higher the monthly instalments.

interest rates

R denotes monthly interest rate

The applicable interest rate is defined as the percentage that the lending financial institutions charge interest on the principal amount. A higher rate of interest is responsible for increasing the EMIs and vice versa.

loan tenure

N indicates loan tenure

This refers to the repayment period for a personal loan. The loan tenure is inversely related to EMIs. A longer tenure lowers the EMIs while a shorter one raises them.

What is an Online Personal Loan EMI Calculator?

personal loan emi calculator

What is an Online Personal Loan EMI Calculator?

A loan calculator for a personal loan is an online tool for calculating EMIs that an individual needs to pay for loan repayment.

A free personal loan calculator allows a potential borrower to input values for the loan amount, tenure, and interest rate. The tool then uses these values for computing interest payable till loan tenure, EMI and balance loan amount in a particular period.

However, to understand the working of this online tool, one should have a basic idea about a personal loan EMI first.

What is the Formula to Calculate Personal Loan EMI?

Given below is the personal loan EMI calculator formula -

EMI = [P x R x (1+R) ^N] / [(1+R) ^ N-1]

The 3 components that make up equated monthly instalments of a personal loan are mentioned in the above personal loan calculation formula as P, R, and N.

Where:

P = Principal amount

R = Interest rate

N = Loan tenure

The following table will enable you to understand the above formula better. In this example, consider that the amount borrowed or principal is ₹10,00,000. The rate of interest charged annually is 10.5%. In this formula, the interest rate is calculated every month. This implies R = Rate of Annual interest/12/100. Therefore, as the interest rate is 10.5% per annum here, then R = 10.5/12/100=0.00875.

The computed EMI will be ₹13,493. Thus, you need to pay ₹13,493 for 120 months to repay the complete loan amount. The total amount payable will be ₹13,493 * 120 = ₹16,19,220. This includes ₹6,19,220 as interest on the acquired loan.

Parameter Value
Principal ₹10,00,000
Annual interest rate 10.50%
Loan tenure 10 years or 120 months
EMI ₹13,493

Benefits of a Personal Loan EMI Calculator

Illustrated below are several benefits of using a personal loan EMI calculator:

Fitting in the EMIs in the monthly budget with ease

While calculating monthly instalments through a personal loan EMI calculator, a borrower gets to know the exact amount they need to pay. This helps them decide all their monthly expenses throughout the loan tenure to fit in the EMIs easily.

Make informed decisions by changing the factors affecting monthly instalments

Through a personal loan EMI calculator, one can experiment with various principal loan amounts along with different interest rates and tenures. This, in turn, makes it easy for a borrower to decide on the loan amount that they should opt for without hampering their finances and lifestyle.

credit rating

Ensuring a healthy credit rating

Individuals can manage their finances by calculating monthly instalments before acquiring a personal loan. This will further help in their punctual loan repayment. They won’t miss out on their EMI payments. This would, in turn, avoid a poor credit rating.

saves time

Accurate results and help save time

A personal loan EMI calculator performs all complicated calculations within seconds, which helps save a lot of time. There are chances of errors creeping in during the manual calculation of EMI. But with this tool, the chances for such errors are zero, thereby ensuring accurate results.

easy to use and access

Easy to use and access

A personal loan EMI calculator is readily available online on several web portals, and using it is pretty simple. Users simply need to input the principal loan amount, loan tenure, and interest rate to get the value of monthly instalments payable. This implies that they can easily calculate the monthly instalments at any time and from any place.

Once you have finalised your required amount using a personal loan EMI calculator, it is time to know the detailed requirements to acquire such funds.

Documents Required for a Personal Loan

Looking for documents required to acquire a personal loan? Here is your answer! Potential borrowers seeking a personal loan should keep in mind various documents required for a personal loan. Given below is the personal loan documents list necessary while applying for this credit instrument:

KYC documents

Salary slips of last few months

Employee ID card

Bank statements of an individual’s salary account for the last few months

What are the Tax Benefits on Personal Loan?

personal loan tax benefits

What are the Tax Benefits on Personal Loan?

Wondering if there is any tax benefit on a personal loan?

Even though a personal loan is not taxable, individuals might avail of tax benefits on a personal loan in India if they put this credit instrument to a specific end-use. According to the Income Tax Act, 1961, one can claim tax deductions and exemptions if the loan amount is put to some specific uses.

An individual can claim tax deductions on personal loan interest repayments if they use the amount to meet expenses regarding business expansion. However, the investment must be made to increase the business revenue.

Section 24(b) of the Income Tax Act, 1961 allows a tax rebate on a personal loan if an individual utilises the amount for house improvement or renovation. For this, interest paid on the loan repayment up to ₹30000 can be claimed as a deduction from the total taxable income. If an individual utilises the amount for purchasing a residential house, a deduction of up to ₹2 lakh is allowed for the paid interest.

This implies that an individual can enjoy tax savings on this credit instrument by using the amount for home renovation.

There are benefits available for using the amount for buying any other asset like gold, non-residential house property, shares, and jewellery. For such investments, one can benefit from the exempted tax on the loan.  The interest paid on this is considered an asset acquisition cost.

It lowers the total capital gains and offers tax benefits for a personal loan.

Now that it’s clear how so many factors can affect your repayment amount, it is safe to use a personal loan EMI calculator beforehand for effective financial management. Besides, potential borrowers should research multiple lending institutions and compare personal loan rates to choose the best offer.

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