Personal Loan EMI Calculator
An interest rate is an amount charged by a lender to a borrower for the given monetary support in the form of debt. Based on the principal amount, the interest rate is calculated in percentage. Interest rates are equated as per different periods, such as monthly, quarterly, or bi-annually. The annual interest rate is applied over one year. A fixed interest remains constant throughout the loan tenure, whereas a floating rate of interest can fluctuate. The longer the tenure higher will be the interest paid.
What makes interest rate calculation simpler today is a smart tool called ‘personal loan interest rate calculator’. Whenever you apply for a personal loan online, the loan interest calculator will help you with accurate results deriving a monthly amount payable. Accordingly, the annual interest payable is also clear and financial planning can be done based on the EMIs.
The interest rate calculator helps in the instant calculation of monthly instalments on your loan. It makes it easy to plan the repayment better. If you want to set the EMI as per your budget, it is flexible to adjust the interest rate to derive a suitable figure. The interest rate and loan tenure majorly influence your loan EMI. Borrowers holding a good credit profile usually get the best interest rates.
The online interest rate calculator helps in the effective planning of personal loan repayment in the given tenure. Before you apply for a personal loan online, know the exact EMI amount inclusive of interest using the interest rate calculator freely available online on instant personal loan apps and websites. Select the required loan amount, loan tenure, and the percentage of interest to know the exact interest amount payable.
Earlier when interest rate calculators did not exist, doing manual calculations was the only option. It often gave inaccurate results and kept borrowers in a fix whether to go ahead with a personal loan or not. Since the interest rate calculator was introduced online, the availing of personal loans became simpler. Easy calculation of the interest and EMIs gave borrowers the confidence of applying for personal loans with clarity on the monthly amount payable.
The kind of interest rate you choose becomes very important for balancing your budget and financial plans. While technology has altered the way loans are being disbursed, some factors that affect your interest, such as type of interest rate, credit scores, down payment, and loan type. So, borrow money wisely that you can repay easily, even with the interest rate charged.
Interest is an additional charge levied on the principal loan amount. There are two types of interest rates to consider while taking personal loans – simple and compound interest. Simple interest is a one-time rate of interest on the principal amount without any accumulation of interest over the given period of time. Compound interest is a complex one added to the accumulated interest of previous periods. Here, borrowers are liable to pay interest on the interest as well as the principal.
Simple interest is calculated on the principal amount of loan, whereas compound interest is computed on the principal amount and also on the accumulated interest rate over a period of time.
Compound interest can work against you and land you in debt if the loans borrowed are levied with very high-interest rates.
For example , a credit card balance of Rs.1,39,000 carrying an interest rate of 24% compounded monthly would result in a total interest rate of Rs.33,360/ annually or Rs.2780 monthly.
The end goal is to acquaint yourself with the basic concepts of simple and compound interest rates that will guide you to make better financial plans, saving your money, and increasing your net worth over time.
The fixed interest rate remains static throughout the load period, whereas the variable interest rate is known as the floating rate and keeps changing as per the fluctuations in the market. A fixed interest rate is generally higher than the variable rate. Borrowers charged with variable interest may notice an increase in their interest rate while those with fixed interest remain unaffected by market changes. Initially, if the interest rate is less and likely to increase in the future, it is best to lock your loan with the fixed interest rate.
Also known as the Loan EMI calculator, the interest rate calculator is a useful tool to calculate loan EMIs and the interest rate levied on them. Knowing the interest rate beforehand can save borrowers from the financial burden of loan repayment and avoid delays in clearing EMIs.
The interest rate calculator indeed helps the personal loan seekers to see through their EMIs and interest amount payable before taking the loan. In case, the monthly instalments seem to be more, borrowers can flexibly change the values on the personal loan interest calculator to derive a suitable EMI that is easy to repay.
Various instant loan apps are available easily on the Play Store. Hence, accessibility to loan calculators and interest calculators is easy, giving out quick and accurate results in no time.The following three factors influence loan EMI and interest rate:
To set the loan EMI and interest, loan calculators allow you to flexibly adjust the above variables and derive a suitable figure.
Interest Rate Formula
There are different formulas applied to determine a rate of interest, whether it is simple interest or compound interest:
Simple Interest Rate:
P x R x T ÷ 100,
where
P = Principal,
R = Rate of Interest
T = Time Period of the Loan in years.
Compound Interest Rate: P (1 + r/n) ^ nt P is the principal amount, r is the rate of interest per annum, n denotes the number of times in a year the interest gets compounded, and t denotes the number of years.
The benefits of a loan interest calculator are many; the tool is immune to errors as compared to standard calculators used for manual calculations. The loan interest calculator can be used for any type of loan, such as personal loan, home loans, car loans, business loans, etc.
The online interest calculator tool can be used even in the planning phase where you have just thought of a personal loan and want to get clarity on interest rates and EMIs payable. Interest is a critical part of availing of a loan and if you have a clear idea of the interest rate incurred in seconds of using the loan calculator, nothing better than this!
Here are some key benefits of using a loan calculator for equating interest and EMIs: