Personal loan involves a good number of mathematical calculations from the margin amount to EMI. One of the easiest ways for the borrowers to steer clear from this confusing number of jumbles is to use a personal loan EMI calculator.
In a personal loan EMI calculator you will just have to enter the requisite details such as the loan amount you have taken, the tenure for which you have taken the loan and the rate of the interest rate. The EMI calculator will automatically compute the sum you will have to pay in the form of your monthly installments or EMIs.
Another great and offline option to calculate the EMIs on your personal loan is to use excel loan calculator. The EMI calculator excel sheet provides you with the option of computing your EMI just by using your excel sheet. However, there are certain factors to take into consideration prior to calculating EMI in the EMI calculator excel sheet.
Factors Influencing The EMIs
There are certain variables on the basis of which your EMI calculator excel sheet calculates your EMI. These variables are as follows:
The loan amount, also known as the principal amount, refers to the total amount you have borrowed from the lender. It is on this amount that the interest is to be charged. The higher your loan amount stands to be the higher will be the interest charges for you to pay.
Downpayment is the loan amount you pay while getting the loan. It is also called margin amount. The more your down payment is the lower will be the principal amount and hence the EMI amount will also be lower.
The repayment tenure starts right off from the date on which your loan is granted to you. It shows the time period of your loan repayment. The longer your tenure is the lower will be your EMI amount and vice versa. But with a long tenure also comes a higher interest rate.
Interest Rate is the means of generating the income for the lender. It is the amount you have to pay additionally to your principal amount. There is no fixed interest rate and it usually differs from one individual to another. The two major factors deciding the interest rate are your credit score and monthly income. If your credit score is high you are more likely to get a loan at lower interest rates.
Calculating EMI In Excel
The formula you need to keep in mind while calculating EMI in excel is:
=PMT(Rate, NPER, PV, FV, TYPE)
Apart from the function PMT, all the other elements in the aforementioned formula are variables. Each of them, therefore, will need to be put specifically to ascertain the EMI.
The meaning of these variables are as follows:
Rate refers to the interest rate charged on your loan amount. In order to calculate it, you will have to divide a given number by 12 as the rate is usually given for a whole year.
NPER refers to the number of EMIs for a specific tenure. To get the value of NPER, you can multiply the number of years by 12.
PV or present value is the principal amount for which you have taken the loan.
FV or future value refers to the amount to be paid after the last payment.
It is merely used to denote the time of the month when your EMI is due. If your payment is due at the beginning of the month, TYPE will be 1. However, if your payment is due towards the end of the month then the TYPE will be 0.
Steps To Calculate EMI
Once you have understood the terms the steps to calculate EMI in excel would be as follows:
- Open the excel sheet
- Enter all the variables correctly
- Use the formula ‘PMT(Rate, NPER, PV, FV, TYPE)’
- Click ‘Enter’
- The results will be shown to you.
It is recommended to also use an online EMI calculator to crosscheck for any errors done through the manual process.