Loans are boon for those looking to fulfill their wishes when they do not have the monetary support to do so. This can be building a house, buying a car, or even going on a vacation. There are a plethora of loans available in the market today and based on the requirement you can choose a loan that fits the same.
What are Personal Loans?
Personal loans, unlike auto loans, home loans, or education loans can be used for a variety of purposes, from paying off credit card bills to unexpected medical bills to fun vacations. As personal loans are unsecured loans, i.e. they do not require collateral, they are easy to avail. However, due to the increased risk factor, these loans do come with an interest rate that is slightly on the higher side. However, as long as your credit score is optimal and you are able to pay off the loan within the given term, personal loans are a great way to build credit.
As is the case with most other loans, personal loans, once approved, come with a set repayment schedule and interest rate that is determined by the applicant’s credit score as well as the principal amount that is borrowed. The equated monthly installment (EMI) will be based on these factors. A question that is commonly asked is ‘How to calculate EMI for Personal Loans?’
What is an EMI?
An equated monthly installment or EMI is a fixed amount that is made by the borrower to the lender on a specific date every month or as agreed upon by both parties. This amount is determined by the principal amount that is borrowed from the lender such as banks or other Non-Banking Financial Companies (NBFCs). Additionally, the interest rate imposed by the lender as well as the repayment term plays a role in determining the EMI. It is to be noted that the credit score of the borrower is a significant determiner when it comes to the interest rate imposed and repayment tenure.
How to Calculate Personal Loan EMI
In order to calculate the EMI that is to be paid, an EMI calculator is used. The EMI calculator is based on a specific formula and uses the amount borrowed, rate of interest imposed, and the tenure decided (in a number of months) to decide the EMI. These calculations can be done manually based on the formula mentioned in the next section or through online personal loan EMI calculators.
Personal Loan EMI Calculator Formula
The formula for calculating the EMI is as follows:
P x R x (1+R)^N / [(1+R)^N-1]
Where P stands for the principal amount that is borrowed
R represents the rate of interest imposed
N is the tenure in the number of months
For example, if Rs. 10,00,000 is the amount borrowed (P), 10.5% is the rate of interest imposed (R), and the 120 months is the tenure (n), the EMI to be paid using the above formula will be:
10,00,000 x 0.00875 x (1+0.00875)^120 / [(1+0.00875)^120-1] = Rs. 13,493
The rate of interest (R) is calculated monthly i.e. it is calculated as (Annual Rate of interest/12/100) in this case (10.5/12/100 = 0.00875)
The above formula can be used to calculate EMIs for all types of loans and not just personal loans unless mentioned otherwise. We at MoneyView understand that sometimes it is better to let the experts handle the calculations. In case you do not wish to calculate EMI by using the above formula, you can also check for online personal loan calculators or online personal loan EMI calculators. All you will have to do is enter the required values i.e. amount borrowed, the interest rate that is charged, and tenure in months that has been agreed upon. The online calculator will do the needful and provide the EMI amount that will have to be paid.
Why Choose Money View Personal Loans?
Borrowers today are spoilt for choice. There are hundreds of lenders in the market offering personal loans that are advertised at competitive rates of interest. But most of them have hidden charges that applicants find out about much later. At Money View, transparency is given utmost importance along with customer service. This is why, at Money View, personal loans of up to Rs. 5 lakhs can be availed at interest rates starting at just 1.33% per month. The repayment tenure can also be chosen based on the borrower’s comfort and can extend up to a period of 5 years. Additionally, the entire process is completely secure and paperless therefore extremely convenient as well.
The best part is that Money View uses a custom credit model, therefore even those with lower credit scores can still apply for a loan. So, what are you waiting for? Visit Money View official website i.e. http://moneyview.in/ and apply for a quick and easy personal loan and make your dreams come true.
Personal loans are one of the most sought-after loans in the market today as they can be used for a variety of purposes. These unsecured loans are also easier to procure. If applicants are concerned regarding their ability to repay the same, they can use the EMI calculation formula given online and find out the amount they will have to pay back and plan accordingly. Additionally, online personal loan EMI calculators can also be used for the same.