Personal Loans are often considered the choice for several Indians looking to supplement their finances to meet various expenses. This Loan is easy to understand. You can also use the funds from it to pay for your dream wedding, overseas education, and more. While a Personal Loan is pretty advantageous, you need to consider the interest rates and the Loan amount.

Another crucial aspect when opting for a Loan is the equated monthly instalment. Let us understand EMIs and why they are essential to consider it when you apply for a Personal Loan. Here is also how to calculate them.

Understanding monthly EMIs

The EMI is the amount you pay banks monthly as Loan instalments. This number depends on the Loan amount, tenure, and interest rates. The EMI is used to repay the principal and interest over the tenure of the Personal Loan. While the Loan EMI usually remains the same, the interest rates and principal amount changes. The interest portion decreases while the principal portion increases.

Reasons to know about EMIs

Knowing your Personal Loan EMI beforehand can offer multiple benefits:

• Make comparisons

When considering a Personal Loan, you may come across several offers with different interest rates, Loan tenures, and amounts based on your eligibility and personal finances. When you determine the EMI of each offer, you can compare them easily. This lets you select a Loan offer that is the most affordable.

• Plan your budget

When you know how much you need to pay towards your Loan repayment every month, you can plan your monthly budget accordingly. If the EMI seems higher, you can select a longer repayment tenure or a lower Loan amount. Today, you can even use an online EMI calculator to determine the repayment amount that works for you.

• Avoids defaulting

If you default on your Loan repayment, it negatively impacts your credit score and viability as a potential borrower. Hence, be clear about your EMIs. This way, you do not underestimate it and default on your Loan repayment.

How to calculate EMIs?

Calculating the EMI of a Personal Loan manually can be tedious. Instead, use an online Personal Loan EMI calculator to determine it. The calculator is usually free and considers the Loan tenure, amount, and interest rate to display the EMI. It also offers the overall amount due on your Personal Loan and a detailed breakdown of the total interest you need to pay.

Conclusion

Now that you know the reasons for learning about monthly EMIs and how to calculate them, you can quickly determine them before applying for Personal Loans.