How a Personal Loan EMI Calculator Works
A personal loan EMI calculator is used to calculate the amount of EMI that the borrower needs to pay the lender every month. It is a handy tool that calculates the EMI amount based on the details you enter. The details you need to enter in a personal EMI calculator is as follows:
- Personal Loan Amount: The total amount you borrowed is your loan amount.
- Interest Rate: There are two types of personal loan interest rates,fixed and floating. In fixed interest rate loans, the interest rate doesn’t fluctuate and remains the same throughout the loan tenure. That means, all the EMIs till the loan is paid off will be the same. However, the floating interest rate can vary, and hence the EMIs vary from time to time according to the fluctuation in the base rate.
- Personal Loan Tenure: It is the time period chosen by the borrower to repay the loan. Most banks offer flexible loan tenure. That means, the borrower has the power to choose the loan tenure, which usually ranges from 1 to 5 years.
Once these details are entered in the personal loan EMI calculator, it then works on two arithmetic formulae – a simple calculation to calculate the interest and a complex calculation to calculate the personal loan EMI.