In today’s world, applying for a personal loan is a simple process. You simply need to gather all of the required documentation before applying for a personal loan. However, you should still keep an eye out for the bank’s interest rate on the loan. In addition to the interest rate, the processing fees must be considered. Once you know the interest rate that the bank will charge on your personal loan application, you can use the bank’s personal loan EMI calculator to calculate your EMI. Now that you know the interest rate that the bank will charge, as well as the loan processing fee, you can go to the bank’s official website to access the personal loan EMI calculator. However, it is important to note that in order to use the EMI calculator you need to check online CIBIL score for free and various other factors.
How to Use the EMI Calculator?
Visit the bank’s official website and search for the EMI calculator. To calculate your EMI, simply enter your loan amount, interest rate, and loan tenure into the EMI calculator. The EMI amount will then be calculated and displayed instantly by the calculator. Knowing your EMI amount ahead of time will allow you to make better financial plans and manage your finances more effectively. The reducing balance method is commonly used by banks to calculate the EMI amount applicable to the loan.
However, it is a good idea to consult with your bank or lender ahead of time for more information. The method used by the bank to calculate the EMI can also have an impact on the EMI amount. Banks or lenders generally use one of two methods to calculate the EMI amount. The flat balance method of interest calculation computes interest on the entire principal loan amount over the life of the loan. As a result, the EMI remains constant throughout the loan’s term. In contrast, the reducing balance method computes interest only on the outstanding principal loan amount for each successive month rather than the entire loan amount.
As a result, as the loan tenure progresses, the principal amount decreases, resulting in a decrease in the EMI amount. The reducing balance interest calculation method is preferred by the majority of banks today. As a result, the majority of EMI calculators employ the reducing balance interest calculation method to compute both the interest and the EMI on a personal loan.
Factors Affecting Your Personal Loan EMI
The following are the major factors that may have an impact on your personal loan EMI:
Loan Amount
The greater the loan amount, the greater your EMI amount, assuming the interest rate and loan tenure remain constant.
Interest Rate
The higher the interest rate charged by the bank on your personal loan application, the higher your EMI and total interest amount payable on your personal loan.
Loan Term
A shorter loan term would result in higher EMIs, and vice versa. A longer loan tenure, on the other hand, would result in a higher total interest payable amount when compared to a shorter loan tenure.The above mentioned are the key factors that might affect your EMI amount when you apply for a personal loan. Moreover, it is advisable to make Online CIBIL score login to be able to keep a track of your credit score before applying for any loan. By doing so you can boost your chances of getting approval on your loan application as well as avoid loan rejections. Since having multiple loan rejection can also have an impact on your credit score. Therefore, it is advisable to keep a regular check on your credit score and report.
