Personal loan calculator: This is how it helps ascertain the optimum EMI | Mint

Personal loans: At the time of borrowing a loan, it is vital for borrowers to ascertain the right EMI (equated monthly instalment). It is highly recommended, therefore, to use the personal loan EMI calculator. To be able to use it, one must first enter the three inputs which are loan amount, loan tenure and the rate of interest. Here we describe these three inputs for the EMI calculator in detail.

Loan calculator: 3 factors that determine loan EMI

Rate of interest: This is the annual interest charged by the bank from the borrower for lending the loan. This is inversely proportional to the loan instalment. In other words, higher the interest rate, lower the EMI. Conversely, lower the interest rate, higher the EMI.

Loan amount: This is the total amount of loan given by the lender to the borrower. Typically this is directly proportional to the loan EMI. This means higher the loan amount, higher the EMI and conversely, lower the loan amount, lower the instalment.

Tenure of loan: Finally, the last input that you need to enter in the personal loan EMI calculator is loan tenure. Longer the loan tenure, smaller the monthly instalment. And shorter the tenure, bigger the EMI.

For instance, when the loan tenure is 36 months (for ₹5 lakh loan payable at 10%), the EMI would be ₹16,133. When we raise the tenure to 48 months, the EMI would drop to ₹12,681.

So, next time when you borrow a loan, make sure you enter all the inputs in the personal loan EMI calculator to ascertain the optimum EMI. Although you can not change the rate of interest, you can definitely increase or decrease the loan amount (as well as tenure) to ascertain the EMI.

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