Whether you’re planning a home remodel, want to take a vacation soon, thinking about consolidating debt, or have a cash emergency, a personal loan can come through for you in many scenarios. However, you don’t just walk into a bank and ask for one without considering a few important factors.
Before getting a personal loan, it is paramount to think about things like the loan term, who to borrow from, and the amount you are eligible for.
Most importantly, you’ll want to carefully consider the interest rate and monthly installments, to know whether you can afford the loan. With this in mind, let’s take a look at how to determine your EMI and personal loan eligibility online.
What is EMI?
In the simplest of terms, EMI or Equated Monthly Installments refers to the amount you’ll need to pay each month after taking out a personal loan. In essence, it is usually a sum total of portions of the loan principal and the monthly interest payments.
Besides the principal and the interest rate, a loan’s EMI also depends on the loan term or the number of months in which the loan should be repaid. Some EMI calculation formulas also take into account the annual interest rate.
The Importance of Calculating EMI
So, why should you bother calculating EMI in the first place? Well, for starters, it helps you understand exactly how much you should expect to pay each month, so you can plan your finances accordingly throughout the loan term and avoid defaulting on your loan.
Better yet, it’s easier to make an informed decision and pick a loan you can afford when you have an EMI figure in mind. It can help you save money through a personal loan in other words. With this out of the way, how exactly do you calculate EMI?
How to Calculate EMI Online
There are several formulas out there that can help you calculate EMI, but none of them may precisely make your life easier – at least not when done manually. The most basic formula is EMI = [P x R x (1+R)^N]/[(1+R)^N-1]. In this formula, P is the principal loan amount, R is the interest rate, and N is the loan term/tenure.
One of the best and simplest ways to do so is by using an online personal loan EMI calculator. If you already took out a loan that you plan to refinance, a refinance personal loan calculator can be a great way to find your EMI alongside how much you can save by using a different lender.
Finding Out Your Loan Eligibility Online
When you are looking for a personal loan, one of the first things you may do is go online to research your options. This can be a great way to compare lenders and find the best interest rates. However, you should also be aware that some lenders will require you to meet certain eligibility requirements before you can apply for a loan.
One of the easiest ways to determine your personal loan eligibility is to use an online eligibility calculator. These calculators will ask you for some basic information about your finances, such as your income, debts, and credit score. Based on this information, the calculator will give you an estimate of how much you may be able to borrow and what interest rate you can expect.
Of course, the final decision about your loan eligibility will be up to the lender, and they may require additional information from you before making a decision. However, using an online eligibility calculator can give you a good idea of what you may be able to expect from different lenders.
With the pointers above, now you know how to calculate EMI and apply for a personal loan online. Simply running an EMI calculation on a reputed website or an app after entering your loan information should give you an immediate EMI estimate. Calculators for finding eligibility are also widely available.