Personal work is a remedy for all financial crises and emergencies. Bank or financial institutions offer personal loans to the clients on their eligibility and credit score basis. If you are also looking for a personal loan to finance any of your personal needs, then you must get clear of everything before processing the loan application. You should consider and reconsider the loan amount that you want to get sanctioned and then you should check the EMI with the help of a personal loan calculator. Using a personal loan calculator will give you a complete idea of different tenure and EMI interest and monthly payments and so on.

Here we are discussing how to calculate loan payments in 3 easy steps –

1st step:

Know the type of loan
To calculate your loan payment, you must identify the loan type to figure out the loan payment schedule. You should check out the type of your loan whether it is an amortized loan or an interest-based loan.

Let us understand the basic difference between the two –

Amortized loan – Amortized loan comes in the form of a personal loan that involves principal balance and interest for a specific period. Here, the borrower has to pay the loan amount monthly installment amount that is in addition to the principal amount and interest amount.

Interest-only loan – In this kind of loan, the borrower has to pay monthly interest-only for the mentioned tenure and then return the principal amount after the tenure is over. This is not a trendy loan facility as there are higher monthly interest rates and a burden of paying the principal amount at a single time.

2nd step:

Use a personal loan calculator
The entire range of personal loans comes into the category of amortized loans. You need to calculate the monthly amount or EMI that you need to pay. To calculate this, you need a personal loan calculator. Almost all the official websites of banks or financial institutions or lenders have their loan calculators.

3rd step:

Calculate the EMI

Using the personal loan calculator, you can easily calculate the EMI. Let us understand it with an example –
Suppose you have taken a loan of 1 lakh at a 7.5% annual interest rate for 5 years. You will need to know and understand the following terms to get the value –

A = Payment amount per period

P = Initial principal (loan amount)

r = Interest rate per period

n = Total number of payments or periods

The formula for calculating your monthly payment is:

A = P {r(1+r)n} / {(1+r)n –1}

Putting the numbers,
P = 100,000

r = 7.5% per year / 12 months = 0.625% per period (and entered as 0.00625 in your calculator)

n = 5 years times/ 12 months = 60 total periods

So, when we insert the value:

100,000 {(.00625 x 1.0062560) / (1.0062560 – 1)}

100,000 {(.00625 x 1.4533)/(1.4533 - 1)}

100,000 (.00908/.4533)

100,000 (.0200377) = 2000.38

Hence, your monthly payment would be 2000.38.

If you have an interest-only loan of 1 lakh, 5% on monthly basis for one year, then this will be calculated differently -

I = 100000x5% = 5000

You will have to pay 5000 on monthly basis and return the amount at the end of the year. Hence, it causes a heavy interest charge.

With these simple three steps, you can easily calculate the personal loan amount and get an idea of what you need to keep in advance to pay the EMI. As you must know that you will have to pay heavy charges on the name of EMI default, so it is always good to remember the EMI date and keep the sufficient balance in advance in your account so that the same can get easily debited on the scheduled day.
Make sure to pay the EMI on time after taking the loan amount and then enjoy the financial responsibility and freedom the way you want.

Finishing up:
You must use an authentic personal loan calculator from a premier lending institution like Clix Capital. You must know all the prerequisites and charges so that you can rest assured of getting the bestpersonal loan. The professionals at Clix Capital will help you in accessing the personal loan most finely. This way you will be able to sort out all your urgent personal needs in the ever best ways.


Clix Capital Services Private Limited
Corporate Address: 901b, 9th Floor, Two Horizon Centre, DLF Phase V, Gurgaon, Haryana, India – 122002
Website: https://www.clix.capital/
P: 1800 200 9898