Step-by-step process: How online loan EMI calculator can make financial planning much easier?


There has been a significant increase in the popularity of personal loans over the last few years and it can be attributed to the following points:

  1. Lenders are pushing personal loans more owing to a slow growth in the housing and vehicle loans segment.
  2. There exists an absence of strong income growth among individuals.

For those availing these credits, using an online personal loan calculator becomes all the more crucial. This online tool is an effective way for applicants to plan their borrowing.

Almost all financial institutions provide these calculators on their official website and app. Several independent websites and intermediary companies also host these calculators online.

As for an online personal loan calculator, using it is easy. Users only have to enter the loan amount, tenor, and rate of interest to view their EMIs instantly along with the total repayable amount and total interest payable.

Few of the steps through which personal loan calculators make financial planning easier are mentioned below.

  • Helps to calculate the loan EMIs

The primary purpose of using a personal loan calculator is to assess the EMIs. Borrowers can choose the right principal and tenor that makes their monthly installments affordable.

They can also make changes to their monthly budget to accommodate the personal loan EMIs and keep their debt-to-income ratio low. A ratio lower than 50% reduces the risk of default and also ensures that borrowers can pay their monthly installments comfortably.

  • Enables customers to pick the right tenor 

Online personal loans usually have a tenor that ranges up to 60 months. A longer tenor makes the EMIs affordable, while a shorter one reduces the cost of the loan (principal + interest).

For example, a borrower avails a personal loan of Rs.15 lakh at a rate of interest of 12%. Now, the EMIs and cost of the loan for two different tenors will be –

  • 3 years: EMIs – Rs.49,821 and cost of loan – Rs.17.93 lakh.
  • 5 years: EMIs – Rs.33,367 and cost of loan – Rs.20 lakh.

Individuals can use an online personal loan calculator to pick the right tenor and keep their EMIs affordable while saving on interest.

  • Assists in prepaying the loan

Prepayment of a personal loan can be of two types –

  • Part-prepayment – Where borrowers prepay a portion of their outstanding balance, which is more than an EMI, to reduce the tenor or subsequent EMIs.
  • Part-prepayment during the early months of repayment helps customers to save the maximum on interest.

An online personal loan calculator assists borrowers in determining the time and outstanding balance. These two are crucial factors for prepayment since the majority portion of the loan EMIs during the initial part of the tenor is the interest amount. With the subsequent payment of monthly installments, the interest decreases while the principal increases. This process of EMI calculation is known as amortisation.

Thus, personal loan calculators are an essential tool that individuals must make use of before borrowing. They can also use these to compare and select a low interest personal loan.

For instance, individuals can apply for a personal loan with NBFCs like Bajaj Finserv, a lender that offers attractive rates of interest with transparent terms and conditions.

They also bring pre-approved offers, which reduce the time for availing funds through a hassle-free process. These offers are available on a host of financial products like credit cards, business loans, personal loans, and more. Individuals can check their pre-approved offer by providing only their name and phone number.


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