How do you calculate the interest rates on a personal Loan
summary:Wondering how to calculate the interest rate for your personal loan? This guide will provide suggestions and a no-cost Personal Loan calculator you can use at your convenience.
A personal loan can help you cover various miscellaneous needs quickly. They’re easy to obtain and the interest rates for personal loans are typically competitive and affordable and you can repay your loan on the time you prefer. Yes it is true that a personal loan provides many benefits.
However, before taking loans, you should be aware of how to determine the individual interest rate on a loan. This will help you determine your loan needs, choose an appropriate lender, and secure the best deal. Find out more about the formula for calculating personal loans and how you can utilize it to your advantage.
How can I calculate the rate of interest on Personal Loans in India
The amount of interest that you pay is calculated on the basis of the principal amount and the rate provided. It is a major part in your EMI. Utilize the formula below for calculate your personal loan interest as well as the amount of interest.
The principal amount is the interest paid. divided by the interest rate / 12 (months in a calendar year)
In other words, if you are able to borrow 10 lakhs of rupees and the loan’s rate of has an interest rate of 11 percent, the cost of interest for the first month would be
Rs 10,00,000 per 0.11/12 = 9166.66 Rs 9166.66
In this case:
The principal amount is Rs. 10,00,000.
The rate of interest is 11%.
In order to calculate the amount of rate of interest in the initial month divide the amount by 12.
Why is it crucial to know the formula used to calculate Personal Loans?
The interest rate will aid in understanding the importance for the Equated month instalment (EMI). It is the EMI is the total of principal and the component of interest. So, by making the calculation of interest you’ll be able plan how much you will budget over the whole duration of the loan.
How can you get the highest rate of interest for a personal Loan
Here are some tips you can try to do in order to achieve a fair personal loan rate of interest:
* Maintain a good credit score:
Credit score refers to a 3-digit number that allows potential lenders to assess your creditworthiness. The higher your rating, the higher the interest rate you obtain. In addition, paying off all loans previously incurred and paying off credit card debt in time can ensure an excellent credit score. In the ideal scenario, you’ll want to aim to score 775 or higher.
* Compare different lenders:
The interest rate could differ, so reviewing all lenders and loans is crucial to select the most affordable one. For example, IDFC FIRST Bank provides personal loans at rates that start at 10.75 percent. Additionally you can also avail loans up to Rs. 1 crore.
* Maintain a steady job record:
If you’ve maintained a stable job for a long time and have a stable job, you will be able to avail an interest rate that is low more quickly. However, if you’ve changed jobs in the last few months and have a new job, you might need to pay a greater interest rate. Your employer’s reputation is a significant factor in determining the interest rates and loans and, consequently, the EMI payment.
Conclusion
A personal loan’s the interest rate can play an essential part when you’re shortlisting a loan. Low rates can benefit you over the long term and will help to save you money. It is therefore crucial to understand the way you calculate interest in order to be able to calculate the interest rate and budget your money in advance so that you do not have any issues or lapses in the future.
Disclaimer
The contents of this article/infographic/picture/video are meant solely for information purposes. The information is general in nature and intended for solely informational purposes. It’s not a substitute for advice specific to your particular situation. This information may be subject to change and revision, as well as completion as well as verification and modification, and may be changed significantly. This information does not intend to be distributed or use by anyone in any country where such distribution or use is in violation of laws or regulations or be subject to IDFC FIRST Bank, or any of its subsidiaries to registration or licensing conditions. IDFC FIRST Bank will not be liable for any direct or indirect damage or loss that the user may incur by making financial decisions that are based on the content and the information contained. Consult your financial advisor prior to taking any decision regarding your finances.
The benefits, features and deals discussed in the article are valid as of the date of publication of this blog. It is subject to change without prior notice. The content herein is subject to any other specific product terms and conditions as well as any conditions and terms, as applicable. Please refer our website www.idfcfirstbank.com for latest updates.
