Personal Loan EMI Calculator

What is a Personal Loan Calculator?

A personal loan calculator is a financial tool that helps to estimate monthly payments, the total amount of interest, and the total cost of borrowing that amount. A personal loan calculator gives insights that help the user compare multiple loan options conveniently. Moreover, it helps you better plan your finances.

How Can Personal Loan Calculator Help You?

Pocketful’s Personal Loan Calculator can help you in the following ways:

1. Estimate Monthly Payments: Input the loan amount, interest rate, and loan tenure to find your monthly payment. This tool will accurately calculate the monthly payment that you need to repay the loan amount, along with the interest rate.
2. Compare Loan Offerings: When exploring various loan options, using a loan calculator can help you effectively compare the different lenders based on diverse interest rates, loan terms, and total repayment amounts linked with each loan option, ensuring you find the most affordable choice for your financial needs.
3. Understand Total Loan Cost: It shows how much of your monthly payments go towards reducing the loan amounts versus interest so that you can see the real cost of the loan, thus helping you comprehend the overall financial impact.
4. Avoid Overborrowing: Checking how much you will pay back helps you choose a loan that you can afford, avoiding too much debt.
5. Plan for Early Repayment: Some calculators include a prepayment feature, which is particularly useful for borrowers looking to manage their debts more efficiently. This feature allows users to see how making additional payments, whether in a lump sum or through increased monthly calculations, can reduce the overall interest costs linked with their loans.

How Does a Personal Loan EMI Calculator Work?

A personal loan calculator uses the formula below and other important details concerning the loan amounts. Here is how it works:

1. Enter the Loan Details:

• Loan Amount – The total money that you plan to borrow.
• Interest Rate: The annual interest rate in % charged by the lender.
• Duration of the Loan: The time for which you have taken the loan (in months or years).

2. EMI Formula Overview:

• The calculator will use the Loan Payment EMI (Equated Monthly Installments) formula.

3. Display Results:

• Monthly Payments (EMI)
• Total Interest Payable
• Total Amount, i.e., the principal and total interest

Formula to Calculate Personal Loan EMI

Calculating personal loan interest can be confusing, so here is a simple explanation of the key points and how the tool works.

1. Understanding the Basics:

• EMIEMI is the amount you pay every month for taking out a loan. It is like a fixed monthly payment, so instead of repaying a big chunk of money all at once, you just chip in a bit every month. It includes both the principal amount and the interest.
• PrincipalThis is the initial sum of money that you borrowed from the lender.
• Interest RateThis is the interest rate on your loan. Interest rate helps you estimate the interest payable, i.e., the amount of extra money you have to pay back over and above the loan amount.
• TenureThe total number of months you have to repay the loan.

2. The Formula:

• E = [P * r * (1 + r)^n] / [(1 + r)^n-1]
  Where;
  E = EMI
  P = Principal Loan Amountr = Monthly Interest Rate (Annual rate/12)n = Loan tenure in months

Example of Personal Loan Calculator

For instance, you borrowed INR 1,00,000 with an annual interest rate of 12% for two years. Then, the calculation of the personal loan will be as follows;

Monthly Interest Rate = 12% per year / 12 months
= 1 % per month (or 0.01 as a decimal)

EMI = [1,00,000 * 0.01 * (1 + 0.01)^24] / [(1 + 0.01)^24 – 1]
= INR 4,707

This means you would pay approximately INR 4,707 each month for 24 months to repay your loan.

Total Interest Payable = (Monthly EMI * Tenure in Months) – Principal Amount
= 4,707 * 24 – 1,00,000
= INR 12,976

Total Amount Payable = Total Interest + Principal Amount
= ₹12,976 + 1,00,000
= ₹1,12,976

Note: Personal Loan interest is generally calculated on a ‘reducing balance’ basis. This means that as you make your loan payments, the interest is applied to the remaining balance, which gradually decreases over time. So, instead of paying interest on the initial loan amount, you are only p

How to Use Pocketful Personal Loan EMI Calculator?

You can easily use Pocketful’s Personal Loan Calculator by following the below instructions:

Step 1:

Enter the Loan Amount – Adjust the slider or enter the amount in the input box to set your loan amount. For eg, INR 5,00,000.

Step 2:

Adjust the Interest Rate – Adjust the slider to determine the annual interest rate (%) charged by the lender. For e.g., 15%.

Step 3:

Select the Loan Tenure – Select the loan duration by moving the slider and choosing between years or months from the dropdown menu. For e.g., 5 years.

Step 4:

View the Calculation – Once all the details are entered, the calculator will instantly show the Monthly EMI, Total Interest Payable, and Total Amount.

Furthermore, the calculator offers a visual representation of both the principal and interest components of the loan. This helps in understanding the total cost of the loan and making sound financial decisions.

Benefits of Using the Personal Loan Calculator

When you use a Personal Loan Calculator, it comes with a bunch of perks that make planning your loans easier and more efficient. Below are the points that list the potential benefits of a personal loan calculator:

1. Helps you Plan your Budget: A loan calculator provides you with a breakdown of your monthly payment obligations, which in turn helps you analyze how much of your budget is required to repay the loan, ensuring that you make a financially sound decision.
2. Saves Time: Instead of doing the calculations yourself to figure out how much you will owe on a loan, the personal loan calculator gives you the answer right away. It’s so convenient and saves you time, allowing you to compare different loan options easily.
3. Gives Transparency & Control: Having all the information about how you pay back your loans upfront gives you the power to make smart choices with your money. It helps you to stay away from any unexpected charges or hidden fees.
4. Helps in Setting Financial Goals: Whether you’re looking to borrow to buy a new car or renovate your home, using a calculator can ensure you pick a loan that fits your budget and financial goals.