• Home
  • Are online personal loan EMI calculators accurate?

Are online personal loan EMI calculators accurate?

No one wants to take out a loan and find out later that they can’t afford the monthly payments. That is why online personal loan EMI calculators are important – they give borrowers a clear idea of their monthly payments and how long it will take them to pay off their loan. The EMIs (Equated monthly instalments) it shows are based on the loan amount, tenure, and interest rate.

Also, with just a few clicks, borrowers can compare different lenders and interest rates to find the best deal to set a budget accordingly. But are online personal loan EMI calculators accurate? What algorithm do these calculators use to provide results within split second? And can you rely on this information completely? Let’s understand it all.

How to use a personal loan EMI calculator?

Most lenders and financial institutions offer personal loan EMI calculators on their websites. Simply visit the bank’s website. Find the personal loan calculator section, enter the loan amount and interest rate, and select your loan tenure. Your monthly instalments will be displayed immediately.

Most personal loan calculators also show a graphical representation of the loan. This helps you visualise the total amount you will have to pay along with the principal amount and interest. 

Formula used by personal loan EMI calculators

Most personal loan EMI calculators use the following formula to calculate your monthly payment:

EMI = [P x R x (1+R) ^n] / [(1+R)^ n-1]


P = the principal loan amount

r = the interest rate per month

n = the number of months over which the loan is being repaid

Are online personal loan EMI calculators accurate?

To get an accurate estimate of your monthly payments, it is important to enter the correct information into the calculator. This includes the loan amount, interest rate, and repayment period. So, if you enter an incorrect loan amount or interest rate, your monthly payment estimate will also be inaccurate.

You can easily find accurate information about personal loan interest rates on the lender’s website. Once you have this information, you can call the lender and discuss your goals, credit score and the loan amount you want to take out. 

A personal loan calculator does not consider other charges 

While a personal loan EMI calculatoris a great starting point for estimating your monthly repayments, it does not take into account the additional fees you may incur in obtaining the loan.

There are other fees charged by the lender for processing the loan application and initiating the loan. They include loan processing fees, verification charges, penalty on EMI defaults, prepayment/foreclosure penalty, duplicate statement fees, etc. Thus, it’s important to read the terms and conditions before availing a loan.

To sum up

Personal loan EMI calculators use complex algorithms to compute your monthly payments and interest rates to ensure you get accurate results. However, you must ensure to input the correct values to get accurate EMIs. Also, hit the personal loan apply button only after using an EMI calculator offered by a reputable lender’s website.