Personal Loan Interest Calculator

You Wanted to Know About The Personal Loan Interest Calculator

A Personal loan is an amount of money you can borrow for various purposes. It does not require collateral or security. Plus, it is offered with minimal documentation. You can avail of a personal loan to fulfill many requirements such as purchasing gadgets, medical treatment, home renovation, weddings, etc. But, the primary question that might be bothering you is about the interest rate. The good news is that you can calculate your EMI with an online personal loan interest calculator. Ordinarily, repayment is equated in monthly installments (EMIs). And, EMI calculator remains a vital tool to assess the repayment schedule.

So let us know more about the personal loan process.

Calculation of interest

The mathematical formula for calculating interest is as follows:

I = [P x R x (1+R) ^N]/[(1+R) ^N-1]. Here, “P” stands for Principal Loan Amount, “R” stands for Rate of Interest (per month) or annual return on interest (ROI) divided by 12, and “N” stands for Loan Tenure (in months)

The outcomes are structured in your monthly EMI. This calculation provides the breakup of amounts repaid against the principal amount and interest. Plus, it tells about the balance amount you need to pay.

This formula helps you draw a road map towards the repayment of your loan, denoting the milestones and ideal points you should be through in the repayment schedule.

Personal loan process

You will have to visit the branch of the financial institution or bank where you operate your account. You will need to get in touch with the loan department there and procure the appropriate application form. Then, fill in all the required details in the form and, submit relevant documents about your income, age, address, and identity.

The lender will verify the documents and check the eligibility of the applicant. Next, you will be given the loan terms, which you can accept or reject if approved. You can also verify the calculations provided by the bank with the calculations you drew from the personal loan interest calculator.

If everything is as per your expectations, you can move to the subsequent step of finalizing your loan paper. When this has been done, the lender will credit your account with funds. However, it depends on the lender whether funds are credited through a direct deposit into your bank account or a cheque.

Facts to remember during the personal loan process:

  1. Interest rates: Interest rates depend on your credit score, tenure, income, occupation, etc. Along with your overall credit score, previous repayment records will also be checked before your loan interest rate is finalized.
  2. Tenure and repayment: You can get a loan for a tenure that suits your needs. However, You’ll need to repay the loans in equated monthly installments (EMI’s). Your equated monthly installments depend upon the loan amount, tenure, and rate of interest.
  3. Loan payment history: If the bank or lending company sees you have been disciplined with your repayments, you will probably be charged a low-interest rate on the loan.
  4. Banking relationship: Your history of opening savings accounts and fixed deposits with your bank would make you a loyal customer. Your loyalty can establish an interpersonal relationship with the bank. This could fetch attractive personal loan interest rates.

Final Words

Using a personal loan interest calculator helps you to avoid complex mathematics. Plus, it makes the personal loan process easier by offering you several options of financial institutions for comparison of interest rates offered by them. Plus, it educates you about vital papers needed for personal loan process.

You will need to get in touch with the loan department there and procure the appropriate application form. Then, fill in all the required details in the form and, submit relevant documents about your income, age, address, and identity.

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