How To Calculate Personal Loan EMIs

Posted on Friday, July 28th, 2023 | By IndusInd Bank

Understanding how your equated monthly instalments (EMIs) for personal loans are calculated can prove to be an invaluable tool for effective financial planning. Whether you’re contemplating a loan for a much-needed home renovation, managing unforeseen expenditures, or planning a dream vacation, your ability to calculate your loan EMIs can greatly influence your financial decisions. Let’s begin this journey of financial literacy, and by the end of this blog, you’ll be well-versed in calculating personal loan EMI.

Why calculating EMI is important?

Being equipped with the knowledge of calculating your personal loan EMIs can prove to be a powerful asset. This understanding enables you to prepare a robust budget for your monthly expenses and make well-informed decisions when considering applying for a loan.

This not only empowers you to take control of your finances but also aids in proactively planning for your future, ensuring that you comfortably meet your financial commitments.

Understanding personal loan EMI calculation

Calculating your personal loan EMI involves three key components: the principal loan amount, the loan tenure, and the applicable interest rate.

Principal loan amount

This is the total amount that you intend to borrow from the bank. This amount can vary based on your requirements and eligibility. At IndusInd Bank, you can apply for instant personal loan ranging from ₹30,000 to ₹5 lakhs, giving you ample flexibility based on your needs.

Loan tenure

Loan tenure is the duration over which you plan to repay your loan. This period directly affects the amount of your monthly EMI. Longer tenures mean lower monthly payments but more interest paid over time. IndusInd Bank offers personal loans with flexible tenures ranging from 12 to 48 months, giving you the freedom to choose a repayment schedule that fits your budget.

Interest rate

Interest is the cost you pay for the privilege of borrowing money. It’s a crucial factor in determining the overall cost of your loan and your monthly EMI payments. IndusInd Bank offers personal loans with competitive interest rates, starting from 10.49% p.a.

EMI calculation formula

After familiarizing yourself with the principal loan amount, loan tenure and interest rate, you can use the following formula to compute your EMI:

EMI = [P x R x (1+R)^N] / [(1+R)^(N-1)]

where:

P = Principal loan amount

R = Monthly interest rate (annual rate divided by 12)

N = Number of monthly instalments (loan tenure in months)

While the mathematical equation may appear complex at first glance, with a little practice, it becomes manageable.

A simpler approach: use an EMI calculator

If manual calculations seem tedious or complex, worry not! You can leverage technology to make your life easier.

The online Personal Loan EMI Calculator provided by IndusInd Bank offers a quick, error-free method to calculate your personal loan EMIs. Just input your loan amount, tenure and interest rate. The calculator will do the rest, providing instant and accurate results.

Benefits of using an EMI calculator

• It is time-saving and accurate: An EMI calculator eliminates the need for manual calculations, saving you time and effort. It provides accurate results instantly, reducing the chances of errors.
  
  
• Helps with budget planning: By knowing your monthly personal loan EMIs beforehand, you can effectively plan your budget. Whether you prefer higher EMI payments over a shorter loan term or lower EMI payments over a longer term, the calculator helps you choose the most suitable option based on your financial position.
  
  
• Provides flexibility in loan tenure: An EMI calculator allows you to experiment with different tenures and loan amounts. You can adjust these variables to find an EMI rate that aligns with your financial goals and ensures comfortable repayment.
  
  
• Aids in better financial management: Knowing your personal loanEMI amount in advance enables you to make necessary adjustments to your monthly expenses and savings. It can also help you maintain a disciplined approach to financial management and ensure timely repayment.

Personal loans: flexible financing solutions

The beauty of personal loans lies in their flexibility. They can be used for a broad array of purposes, from financing a dream vacation to dealing with unexpected medical expenses or consolidating high-interest debts.

With IndusInd Bank, the personal loan application process is 100% digital, allowing you to apply for a loan from the comfort of your home. It just requires your PAN and Aadhaar details.

Features of IndusInd Bank Personal Loan:

• Competitive interest rates: IndusInd Bank provides personal loans with highly competitive interest rates, ensuring affordability. Several factors, including your credit history, income and the loan amount determine the interest rate you receive. These rates start from 10.49% p.a.  
  
  
• Flexibility in loan amount: IndusInd Bank provides flexibility in choosing the loan amount according to your financial requirements. Whether you need a small loan for a specific purpose or a larger loan to meet significant expenses, IndusInd Bank Personal Loans can cater to your needs. You can avail of amounts ranging from ₹30,000 to ₹5 lakhs.
  
  
• Digital application process: IndusInd Bank provides a 100% digital application process so that you can apply for a personal loan easily from the comfort of your home. You can apply online through the bank’s website.
  
  
• Extended repayment tenures: IndusInd Bank offers flexible repayment options to suit your financial situation. You can choose a loan tenure ranging from 12 to 48 months, depending on your repayment capacity.
  
  
• Foreclosure: IndusInd Bank provides the option of foreclosure of personal loans. If you have surplus funds and wish to close your loan before the scheduled tenure, you can opt for foreclosure by paying the remaining outstanding amount. This may be subject to additional charges, though.

Conclusion

Understanding how to calculate personal loan EMIs is valuable for managing finances. It helps you decide the loan amount you can handle, choose a comfortable repayment period, and understand the cost of the loan in terms of interest. The ease of using an EMI calculator makes this process even simpler, eliminating the need for complex manual calculations.

Remember, a personal loan is a versatile financial product ready to serve various purposes, from home renovations to managing unexpected expenses like medical emergencies. With IndusInd Bank, applying for a personal loan is just a few clicks away. The process is 100% digital and quick, and requires no physical documentation – you just need your PAN and Aadhaar details.

Whether you’re a salaried employee, a self-employed individual, or a professional running your own practice, remember that a personal loan from IndusInd Bank is always there for your financial needs.

Ready to take the next step? Apply for a personal loan with IndusInd Bank today and embark on a journey to financial fulfilment.

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.