Loans are the perfect tool to help you attain your financial goals. You do not have to let go of an opportunity just because it is out of your financial reach. However, loans do present high interest rates. Still, it should not deter you from availing a loan to rid you for your troubles. But, it would be unwise to apply for a loan without knowing every relevant detail about it. The first thing that you need to know about a loan is the interest rate. But, the interest rate depends on various aspects such as applicant’s credit score, annual income of the applicant, and nature of employment among others. Still, you can determine the interest rate that you will have to incur by using a loan calculator.

Loan calculator not only helps you in determining the interest rate of the loan, but they also help in determining the EMIs that you will have to pay. The EMIs of a loan are dependent on a combination of factors that include the amount of the loan, the tenure of the loan, and the interest rate. While you can access many EMI calculators online, it is always prudent to know the EMI calculation formula.

## EMI Calculation Formula

Generally, there are two ways to calculate EMIs, the 1st method is for car and two-wheeler loans. It is known as the flat interest rate method. In flat rate method, the principal amount remains the same throughout the tenure of the loan.

The EMI calculation formula for flat rate interest is:  EMI = (Principal + Interest)/Period in Months

Here, Interest = PRT/100

The 2nd method is the reducing balance method. It considers the outstanding amount when the interest is levied. It means that the principal amount is ignored instead the remaining amount acts as the principal amount for calculation.

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

In the above formula, the outstanding amount i.e. principal amount is denoted by P. The rate of interest charged by the lender, bank or NBFC is denoted by R. The tenure of the loan is denoted by N.

## No-Hassle loans up to INR 2 Lakhs

A major pain point of availing a loan from the bank in addition to the interest rate is the wait. The loan approval process of the banks takes a lot of time. Moreover, even the application process is slow and filled with numerous redundant processes and bureaucracies. Still, if you want a loan exceeding INR 2 Lakhs then bank is the best option for you. However, if you require a loan below the aforementioned value then you are in luck. You can avail the loan by downloading the PaySense Mobile App. The application process is not only simple but is streamlined to ensure that approval is given instantly. Moreover, the difference between the interest rates offered by the bank and PaySense is not too much. But, that’s not all, PaySense also provides you an EMI Calculator online to ensure that you plan your financials perfectly. 