A personal loan is a type of unsecured loan that you can take to meet any planned or unplanned financial obligations. If the loan application is sanctioned, the borrower will have to make repayments via Equated Monthly Installements or EMIs during the course of the loan tenure. The loan provider charges an interest that usually ranges between 10% p.a. and 24% p.a. on the borrowed amount. The repayment tenure usually ranges between 12 months and 60 months.
In order to successfully apply for a loan, the prospective applicant should meet the eligibility criteria set by the loan provider and should have a good credit score. To get a personal loan at a low interest rate, it is recommended that you maintain a credit score of at least 750. Further, prospective personal loan applicants should also make it a point to check their eligibility, compare interest rates quoted by different lenders, and use the EMI calculator tool to check the estimated EMI that will have to be paid on a periodic basis.
You can calculate the monthly EMI payable with the formula mentioned below:
EMI = P x R x (1+R)^N / [(1+R)^N – 1]
In the formula mentioned above, P is the principal, R is the rate of interest, and N is the loan tenure in years.
You can also calculate the EMI by using the EMI calculator tool, which is available on the websites of banks/financial institutions and on third-party financial services websites. To use the EMI calculator tool, you will need to key in certain details such as the loan amount, interest rate, and loan tenure. If you are using a third-party website, you can also filter the loan providers. Once you enter these details, the monthly EMI will be displayed on the website.
A few reasons why you should calculate the EMIs for personal loans offered by different lenders are as follows:
If you find that the EMI is too high, you can adjust the loan tenure or the loan amount. You can also try negotiating with the loan provider to offer you a better interest rate, which will reduce the EMI. You can calculate the EMI in a hassle-free manner online through the bank or financial institution’s official website or through a trusted third-party financial services website. The benefit of using a third-party financial services website is that the EMIs quoted by various banks will be displayed on the same page, without you having to enter details separately for each lender. This makes the comparison process easier and helps you save time, as well.
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