Personal loans have evolved from once being considered taboo to now being an essential part of most people’s personal finance toolkit, and with good reason—they’re unsecured, have flexible terms, and can be used for any purpose!
From making large purchases and covering unexpected expenses to debt consolidation or increasing your credit score, personal loans have emerged as quick solutions to a variety of financial needs.
But like every other loan, personal loans need to be repaid as well, and without a clear plan, repayment can sometimes become overwhelming due to unclear EMI structures and complex calculations.
A Personal Loan EMI Calculator addresses this issue and provides instant, accurate results that fit your repayment strategy.
The best way to manage your personal loan is to have a clear repayment plan, and an EMI calculator helps you do that with easy and accurate results.
Key Features of the Calculator
Personal Loan Calculators help you understand your monthly financial obligations and plan convenient repayment, using a simple formula to estimate your EMI based on the basic components of your loan like the Principal amount, Interest rate, and the Loan tenure.
EMI Formula
Our calculator uses the following formula to derive at accurate EMI amounts for your personal loan:
EMI = [P x R x (1 + R) ^N]/[(1 + R) ^N - 1]
Where,
P = Principal Amount
R = Rate of Interest
N = Loan Tenure
By distributing both the principal and interest payments equally across the loan term, this formula guarantees that your monthly payment will remain consistent throughout the loan's term.
Let’s look at an example to understand this better.
Imagine you are a salaried individual who needs to take out a personal loan for home renovation. You decide to borrow ₹4,00,000 from a bank at an interest rate of 10% per annum for a period of 5 years (60 months).
Your Principal (P) is ₹4,00,000; Interest rate (R) is 10% p.a.; and Tenure is 5 years (or 60 months).
Using this formula, your EMI will be:
EMI = [₹4,00,000 × 0.00833 × (1 + 0.00833)^60] / [(1 + 0.00833)^60 – 1] = ~₹8,494
That makes your total repayment amount as:
EMI = ₹8,494
Total Repayment = ₹8,494 × 60 = ₹5,09,640
Total Interest Payable: ₹5,09,640 - ₹4,00,000 = ₹1,09,640
You pay EMI on both the principal and interest components of your loan. In the initial months, a larger portion of your EMI goes toward paying the interest, while the principal component repayment increases over time.
This process is known as amortization. Over the loan tenure, the amount you pay toward the principal gradually increases while the interest portion decreases.
Let’s understand it better with an example:
| Month | EMI Payment | Interest Payment | Principal Payment | Loan Balance Remaining |
|---|---|---|---|---|
| 1 | ₹8,494 | ₹3,333 | ₹5,161 | ₹3,94,839 |
| 2 | ₹8,494 | ₹3,290 | ₹5,124 | ₹3,89,635 |
| 3 | ₹8,494 | ₹3,247 | ₹5,247 | ₹3,84,388 |
(for the first three months)
In the first month, you pay ₹3,333 as the interest and ₹5,161 as the principal. As time progresses, the interest component decreases, and a larger portion of the EMI goes toward paying down the principal until your loan is repaid fully.
Jiraaf’s Personal Loan Calculator helps you with more than just a few calculations; it helps you handle your loan repayment with a clear and precise strategy.
You can use it for:
Your minimum borrowing amount depends on many factors including but not limited to the lender and your eligibility. Typically, personal loans start at very low amounts ranging from ₹1,000, but different lenders set different ranges.
Loan tenure typically depends upon the amount of your loan, the EMIs you can comfortably pay, and, of course, the lender’s terms. Personal loans generally range from 1 to 5 years (12-60 months). A longer tenure means your monthly EMI is less, but your total interest paid is more, and vice versa.
The EMI on your loan is calculated using a standard formula: EMI = [P x R x (1+R)^N] / [(1+R)^N – 1]. Jiraaf’s personal loan calculator uses this to calculate the EMI on your loan. It uses the principal amount, interest rate, and loan tenure to assess your repayment instalments.
Missing one payment can lead to increased EMI or tenure, late payment fees, an impact on your credit score, accrued interest, and even legal consequences. However, missing just one EMI does not have as significant an impact as missing multiple EMIs. You can set up automatic payments or reminders to avoid missing any payments.
EMI, or Equated Monthly Instalments, represent an amount you need to pay each month in lieu of a loan. In the case of personal loans, the EMI covers part of the principal and part of the interest payments due to the lender. This is paid until a previously agreed upon date, which marks the end of the personal loan tenure.