Personal loans: How to use EMI calculator for managing your loan?
At the time of taking out a personal loan, it is important for borrowers to streamline their finances by using a personal loan EMI calculator. Those who are not aware, a personal loan EMI calculator uses three variables before revealing the figure of the monthly instalment.
The three variables that one needs to enter in an EMI calculator are loan amount, loan tenure and the rate of interest.
EMI calculator: 3 variables that you need to enter:
I. Loan amount: The first variable that determines the loan EMI is the loan amount. The higher the loan amount, the higher the EMI and the lower the loan amount, the lower the monthly instalment.
II. Loan tenure: The second factor that needs to be entered in the personal loan EMI calculator is the loan tenure. The longer the loan tenure, the smaller the instalment, and the shorter the tenure, the bigger the EMI.
III. Rate of interest: Finally, the third variable that needs to be entered in the EMI (equated monthly instalment) calculator is the interest rate, which is directly proportional to the monthly instalment. The lower the interest rate, the smaller the instalment and the higher the interest rate, the bigger the EMI.
Illustration: For example, if someone borrows a loan of ₹5 lakh, which is disbursed at an interest rate of 11 per cent per annum. Now, if the loan tenure is 3 years. These are the values of the three variables mentioned above:
Rate of interest: 11 per cent p.a.
When you enter these figures in the online EMI calculator, you will arrive at this figure: ₹16,369 per month.
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