Selecting the Right Loan Amount with a Personal Loan Calculator - Loan Trivia

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Friday, 28 July 2017

Selecting the Right Loan Amount with a Personal Loan Calculator

Collateral-free personal loans are granted by banks/NBFCs on the basis of an applicant’s credit score, finances and liabilities. Before applying for a personal loan, it is important to understand how the loan and its repayment work. Personal loan eligibility and EMI calculators come in handy here.


Personal Loan Eligibility Calculator

This tool helps to better estimate the loan amount, interest rate and tenure one is eligible for. It also helps in planning the loan better.

You’ll have to provide the amount applied for, your current employment status, earnings and location.

Personal Loan EMI Calculator
EMI can be calculated for personal loans with fixed/floating interest rates manually, on an Excel Spreadsheet or on the EMI calculator on a bank/NBFC’s site using the formula
             
                          EMI= [PxRx(1+R)n]
                                       [(1+R)n-1]

The variables used are Principal-P, monthly interest rate-R and tenure-n (in months). Initially during repayment, EMI consists primarily of interest and later, it mostly consists of the outstanding balance.
There is the annual reducing method and the more common of the monthly reducing methods to calculate EMI. In the annual method, interest is calculated on reduced principal at the end of the year. In the monthly method, interest is calculated on outstanding balance after principal deduction following EMI payment.

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