What is an EMI?
The Equated Monthly Instalment (or EMI) consists of the principal portion of the loan amount and the interest. Therefore, EMI = principal amount + interest paid on the personal loan. The EMI, usually, remains fixed for the entire
tenure of your loan, and it is to be repaid over the tenure of the loan on a monthly basis.
Mathematically, EMI is calculated as under:
P x R x (1+R)^N / [(1+R)^N-1]
P = Principal amount of the loan
R = Rate of interest
N = Number of monthly instalments.
So, say you are applying for a personal loan from Axis Bank, amounting to Rs 2,00,000 at a rate of interest of 15.5% p.a. and your loan tenure is 2 years, your EMI will be calculated as under:
EMI = 200000* 0.0129 * (1+ 0.0129)^24 = Rs 9,745 / [(1+ 0.0129)^24 ]-1
The rate of interest (R) on your loan is calculated monthly i.e. (R= Annual rate of interest/12/100). For instance, if R = 15.5% per annum, then R= 15.5/12/100 = 0.0129.
Finding it complicated? Don’t worry! Use Axis Bank’s Personal Loan EMI calculator.
Remember, the interest rate and your loan tenure are the vital deciding factors for your loan EMI. Higher the interest rate on the loan, higher will be your EMI and vice-versa. Similarly, a shorter loan tenure increases your EMI
and vice versa.
Axis Bank offers Personal Loan at a competitive rate of interest. If you are young and earning a decent, steady source of income with sufficient
work experience, a good number of years before retirement, have low or no EMIs, and your credit score is respectable (750 and above), you could be eligible for a personal loan at an attractive rate of interest.
Do note that during the initial months of the loan tenure, you pay more towards interest, and gradually, as you repay the loan, a higher portion is adjusted towards the principal component. This is because; EMIs are computed on
a reducing balance method, which works in your favour as a borrower.
How is the Personal Loan EMI to be paid?
Your EMIs are due on a fixed date every month, which is notified when the loan is disbursed.
Today to repay your loan, NACH (National Automated Clearing House) mandate makes repayment almost automatic. Your EMIs directly get debited from your bank account.
In case if you skip your EMI…
Say due to insufficient balance or any other reason, assuming EMIs remaining the same, the tenure of the loan would increase.
Remember, skipping EMIs does not reflect well on your creditworthiness and could impact your credit score. Hence, borrow wisely, within your means, in the interest of your financial wellbeing.
And in case if you partially prepay the Personal Loan…
Currently, Axis Bank levies no charge for part-prepayments of personal loan. Likewise, if you foreclose the loan, i.e. pay all the outstanding dues of your personal loan, Axis Bank levies no charge on the foreclosure of a Personal
Loan account.
Axis Bank offers Personal Loan from Rs 50,000 up to Rs 15,00,000 with minimal documentation and speedy approval. At Axis Bank, a personal loan is granted within 48 hours, sometimes even on the same day.
