Using an Online Personal Loan Calculator, You Can Keep Your Finances in Order!

Know How Online Personal Loan Calculator helps Optimise your loan - Loan  Trivia

A personal loan is a multi-purpose loan preferred by many to meet their immediate financial needs. Be it renovating the house or going for a medical procedure, managing a wedding or purchasing a high-end item, a personal loan is the first choice to merge the financial gap. With easy access to online loan apps and simple processing of loan applications, the demand for personal loan continues to rise. Further, personal loans, being unsecured loans, are one of the most reliable as well as affordable financial tool for borrowers. But if you are planning to apply for a personal loan, then you must know how to use an online personal loan calculator.

A personal loan calculator is a tool that helps you calculate your monthly EMIs. This will help budget your EMIs and manage your finances well. The EMI or Equated Monthly Instalment is calculated based on the interest, principal amount and loan tenure.  

What is an EMI Calculator?

To understand this, you need to know how a personal loan works. A personal loan is an unsecured loan that the lender offers you in return of an interest. The lender will check your eligibility and repayment capacity and depending on that they will approve a maximum loan amount. It is wise to not borrow the entire amount that you are eligible for, but to estimate your requirement and weigh it against your EMI affordability. 

When you borrow money from a lender, you need to pay back to the lender the principal amount as well as the interest incurred in equated monthly instalments (EMIs), over a specific period of time called repayment tenure. You can adjust the EMI by adjusting the principal or the tenure. Longer tenure means lower EMIs and better affordability, but this will increase your interest pay outs making the loan very costly. You can also adjust the principal amount to check your EMI affordability.

A personal loan calculator helps you do these calculations automatically. You just need to type in the required loan amount and the tenure of repayment that would best suit you. The EMI calculator would give you an accurate estimate of the monthly EMI that you would have to pay.  This helps you budget your monthly loan payments against your income and expenses. 

Benefits of Using a Personal Loan EMI Calculator

Here is why you must use a personal loan EMI calculator before applying for a loan.

  1. Know your EMI

The primary benefit of a loan calculator is that you get to know the amount of your monthly payable EMI. This prevents you from straining yourself financially with a huge EMI. With loan EMI calculators you can adjust the tenure and the principal to get the most affordable EMI.

  1. Compare loans from different lenders

Before availing a personal loan, you must compare the different offers. There are several websites and online loan apps that have an EMI Calculator. Enter the amount of loan that you are willing to avail, the tenure you are comfortable with and the interest rate offered by the lenders. The EMI calculator will give you a clear idea of the EMI payable based on these parameters. You can choose the one that best suits your budget.

  1. Skip the time-consuming calculations

The EMI calculation involves a complex formula that’s hard to solve manually without pen and paper. So, it will take you much longer to do these calculations than a calculator. With an EMI calculator, it takes less than a minute to calculate your monthly EMI payables. This will help you budget your finances and check your affordability. You can try different combinations to check which lender is offering you the best deal and what amount and tenure suits your loan affordability.

  1. Find the best loan tenure

With an EMI calculator, you can vary your loan tenure and check the EMI payable every month. It is wise to keep the loan tenure as short as possible. As a longer tenure means more interest pay out, this makes your loan very costly. However, you must also check your EMI affordability; a longer tenure means lower EMI and easier repayment. 

  1. Get Anytime Access to the calculator

With online EMI calculators, all you need is your phone. You can download an online loan app and calculate the EMI payable for different loan amounts and varying tenure any number of times at your own convenience. The online EMI calculators will also offer you the break-up of principal and interest in the EMI through pie charts. This will help you understand the actual cost of your loan.

  1. Get accurate results

When you perform such complex calculations manually, there is always a chance of error. With EMI calculators you can be sure of the accuracy. Knowing the exact amount that you would be paying off as the EMI will help you plan your finances in a much better way. 

  1. Plan your finances like a pro 

When you use an EMI calculator it gives you an accurate estimate of the amount of EMI that you would be paying every month. This helps you in planning your finances before availing the loan, which prevents your monthly budget from taking a hit.  You can vary the parameters and find the tenure and loan amount that fits your budget. Using an EMI calculator and making the right judgements on loan amount and tenure also reduces the risk of loan rejection.


Formula Used for Personal Loan EMI Calculation

The EMI calculator uses the following formula to calculate your monthly EMI –

EMI = [P x R x (1+R)^N]/[(1+R)^N-1] 


P: Principal or loan amount

R: Interest rate per month 

N: Number of monthly instalments or loan tenure in months.

Things to keep in mind while using a Personal Loan Calculator

  • Even if you really need a large loan amount, do not borrow more than what you can afford to repay within your capacity. 
  • Ensure to maintain a low debt-to-income ratio of about 50%, including other loans and credit debt responsibilities like home or car loans and credit cards. 
  • Do not apply multiple loans at once as it impacts your credit score. Rather use an EMI calculator to compare the loans and apply for the one that best suits your needs.
  • Download an online loan app for small-ticket loans. They offer you easy loan of up to Rs. 1.5 lakhs at competitive interest rates. You can repay the loan with easy auto-debit EMIs.


Personal loan EMI Calculator is an extremely useful tool that you must use before deciding on your loan. It will help you determine the best suitable loan amount and loan tenure that’s affordable and easy to pay back with your monthly income. 

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