Personal loans have become an essential financial tool to manage your way through today’s fast-paced world. However, lenders do not provide loans out of altruism; thus, they charge interest on the loan to ensure that they get something in return. Managing your personal loans and debt seems like a tough job and it can be if you do not have the relevant tools to guide you. One such tool is the loan calculator.

Personal Loan calculator is a highly beneficial tool as it helps you in determining not just the interest rate of the loan but also the total payable amount. If you know the exact amount that you need to repay then it becomes easy for you manage your expenditure accordingly. Moreover, you can find an EMI calculator online easily to help you ascertaining the monthly amount that is owed to the lender. Therefore, you can plan your monthly expenditure and also find out if you need an influx of cash to balance your financials. But, if you were to search for a loan calculator, you will find numerous calculators online. So, how can you determine which is the best? Well, there is no way to ascertain the best personal loan calculator online. Instead, you should know the formula to determine whether the EMI value provided by the calculator is correct or not.

Formula used by Personal Loan Calculator

Depending on the type of loan you avail, there are two types of formula used by the loan calculator. The two methods are: flat interest rate method and reducing balance method.

The flat interest rate method is applicable to car loans and two-wheeler loans. The formula for flat interest rate method is: EMI = (Principal + Interest)/Period in Months

Interest = PRT/100

The formula for reducing balance method is used for education loans and personal loans. The formula for reducing balance method is: EMI = [P x R x (1+R)^N]/[{(1+R)^N}-1]

Here, P is the principal amount, R is the rate of interest, and N is tenure of loan.

EMI Calculator Online at PaySense

If you are applying for a loan then your first though may be to apply to a bank. Granted, banks have built a credible reputation over the years. However they also have a reputation for a slow and tedious approval process. If you are looking to avail a loan then choose PaySense where your loan will be approved instantly. You can check your interest rate and EMIs before applying for the loan and know exactly how much you will have to pay. So, download the PaySense mobile app now!