A personal loan is one of the most popular loan options today. This type of loan is unsecured which means the borrower does not need to put up any security to avail this loan. The second most popular feature of this loan is that the lender does not put any conditions with regards to the use of funds. This means the borrower can use it for any purpose such as:
• Medical expenses
• Wedding expenses
• Travel expenses
• Home improvement expenses
• Business expansion expenses
Like all types of loans, you have to repay personal loans in EMIs. EMIs areis a fixed sum of money that you repay to the lender over the loan tenure. The EMI consists of two parts: the interest on outstanding principal and the principal repayment. Banks calculate the rate of interest on the outstanding principal, and the balance amount of the EMI is the principal repayment. The formula is:
EMI = Interest payment + Principal repayment
Over the tenure of the loan, the interest payment reduces you repay the principal outstanding. Thus, the initial EMIs have a higher interest component and vice versa in the last few instalments.
While some lenders provide a complete loan repayment schedule broken down into principal and interest payments, as a borrower, it is worthwhile to do your due diligence before you apply for a personal loan. This can be done by using a personal loan EMI calculator. A personal loan EMI calculator uses:
• Principal amount
• The rate of interest on the loan
• Repayment tenure
Using these three items, the personal loan calculator tells you the exact amount of EMI that a particular combination of interest rate and tenure will get you. By calculating the EMI based on interest rates from different lenders, you can decide on which lender to apply to.
Using a personal loan EMI calculator is very simple. To use this calculator, you need three items, i.e. the principal amount, the rate of interest, and the repayment tenure. The personal loan EMI calculator uses a formula to arrive at the EMI amount:
P x R x [ (1+ R)^ N] / [ (1+ R) ^ N-1]
Where:
P= Principal or loan amount
R= Rate of Interest on loan
N=Tenure of the loan in years
On entering these different parameters, the calculator gives you the EMI amount. Some personal loan interest calculators also tell you the total interest that you pay over the loan tenure. The longer the repayment tenure, the more is the total interest outgo, even if the EMI amount is not large.
Using a personal loan calculator can help greatly to make the right decision and save money on interest.
• Medical expenses
• Wedding expenses
• Travel expenses
• Home improvement expenses
• Business expansion expenses
Like all types of loans, you have to repay personal loans in EMIs. EMIs areis a fixed sum of money that you repay to the lender over the loan tenure. The EMI consists of two parts: the interest on outstanding principal and the principal repayment. Banks calculate the rate of interest on the outstanding principal, and the balance amount of the EMI is the principal repayment. The formula is:
EMI = Interest payment + Principal repayment
Over the tenure of the loan, the interest payment reduces you repay the principal outstanding. Thus, the initial EMIs have a higher interest component and vice versa in the last few instalments.
While some lenders provide a complete loan repayment schedule broken down into principal and interest payments, as a borrower, it is worthwhile to do your due diligence before you apply for a personal loan. This can be done by using a personal loan EMI calculator. A personal loan EMI calculator uses:
• Principal amount
• The rate of interest on the loan
• Repayment tenure
Using these three items, the personal loan calculator tells you the exact amount of EMI that a particular combination of interest rate and tenure will get you. By calculating the EMI based on interest rates from different lenders, you can decide on which lender to apply to.
Using a personal loan EMI calculator is very simple. To use this calculator, you need three items, i.e. the principal amount, the rate of interest, and the repayment tenure. The personal loan EMI calculator uses a formula to arrive at the EMI amount:
P x R x [ (1+ R)^ N] / [ (1+ R) ^ N-1]
Where:
P= Principal or loan amount
R= Rate of Interest on loan
N=Tenure of the loan in years
On entering these different parameters, the calculator gives you the EMI amount. Some personal loan interest calculators also tell you the total interest that you pay over the loan tenure. The longer the repayment tenure, the more is the total interest outgo, even if the EMI amount is not large.
Using a personal loan calculator can help greatly to make the right decision and save money on interest.
No comments:
Post a Comment