Personal loan EMI calculator: You need THESE 3 inputs to know your monthly instalment | Mint

Are you planning to raise a personal loan and still in a dilemma over which bank to opt for? Loan borrowers typically make a decision based on the rate of interest charged by the bank. So, a loan applicant is likely to choose a bank which charges a lower rate of interest than others. Another decision which an applicant takes is about the loan tenure.

Longer the loan tenure, smaller the EMI and shorter the tenure of loan, higher would be the loan EMI.

Sounds too complex? Well, it is not, particularly if you use a personal loan EMI calculator? It is a very convenient-to-use tool that helps you evaluate the exact loan instalment which you are supposed to pay.

In order to calculate the exact amount of instalment, a loan borrower must enter these three inputs.

EMI Calculator: Three key inputs to enter

I. Loan amount: This refers to the total amount of loan which is raised by the borrower. If someone has taken out a loan of ₹5 lakh, for instance, the total amount loan would obviously amount to ₹5 lakh.

When you enter this information in the loan calculator, the EMI will increase or decrease along with the loan amount. In other words, loan amount and EMIs are directly proportional to each other.

II. Rate of interest: This refers to an interest rate which the bank is charging. For instance, if you have raised a personal loan from a private bank that is charging 11 percent, then the interest rate would be 11 percent. This is inversely proportional to the loan EMI.

This means when the interest rate rises, the loan EMI falls. And conversely, when the interest rate falls, the loan EMI rises. In other words, when you want your loan EMI to decrease, you need to look for a bank which is charging a lower rate of interest.

III. Tenure of loan: Finally, one more input that you require in order to use the loan EMI calculator is the loan tenure. This refers to the total tenure for which the loan will last. 

For instance, when you have taken a loan for a five-year period, the loan tenure would be five years.  This, as one can imagine, is inversely proportional to the loan EMI. Longer the loan tenure, smaller the EMI. And shorter the tenure, bigger the monthly loan instalment.

(Note: Raising a loan comes with its own risks. So, due caution is advised)