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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
When you take a personal loan, there are some essential details you need to go over. And one such detail is the amortization schedule. This detail is crucial in understanding how you will repay the loan over time and will help you in effective debt management. But what is a loan amortization schedule for a personal loan, and how can you calculate it? Let’s take a look.
What is the Personal Loan Amortization Schedule?
When you take a personal loan, there is a specific duration during which you have to pay it back. This duration is called the repayment period or the loan tenure. And this personal loan repayment schedule is not in one go but in several small installments during the loan tenure. Also, you don’t just pay back the loan amount that you have borrowed. But along with the principal amount of the loan, you also have to pay a certain amount of interest. The amount of interest depends on the personal loan interest rate.
The principal repayment and the interest payment are made through Equated Monthly Instalments (EMIs) of a certain amount that make it easier for you to meet your loan obligations while managing other expenses and financial goals. And an amortization schedule is a loan repayment schedule that your lender will present when you apply for a personal loan.
The loan amortization schedule will show you how exactly you will be paying off the personal loan and how the loan amount you owe will reduce over time. The amortization schedule provides a breakdown of the principal you’re paying, the interest you’re paying, and the outstanding balance amount each month. This table helps you have a debt repayment plan to meet all your EMI payments on time and comfortably.
How Personal Loan Amortization Calculator Works?
An amortization calculator simplifies understanding loan repayments by breaking down fixed monthly payments. To use it, input loan amount, interest rate, and tenure. The calculator computes monthly payments considering these factors, revealing how much goes to interest and principal.
The amortization calculator uses the following formula to calculate the loan repayment structure:
A = [i x P x (1 + i)n] / [(1 + i)n -1]
Where;
A = Periodic Payment Amount P = Principal Amount i = Interest rate n = Total Number of Payments
The amortization schedule tracks the balance, principal, interest, and cumulative interest paid. It helps borrowers grasp the loan's progress, visualising costs and durations. This financial tool empowers users to make informed decisions about their loans.
How to calculate your personal loan amortization schedule?
You can calculate the amortization schedule for your personal loan using a personal loan EMI calculator available online on Kotak’s website. While it’s possible to calculate it, too, manually using the EMI calculator is easier and quicker.
All you need to do is enter the estimated personal loan interest rate, the loan amount you are borrowing, and the duration you are borrowing. Within a few seconds, the personal loan EMI calculator will provide you with an accurate estimate of not just the EMI but also the amortization table detailing how your loan will be paid off over time.
The calculator is free and easy to use. You can use it multiple times and add different values for the tenure and loan amount to arrive at an EMI amount better suited for you and your financial goals.
Personal Loan Amortization Schedule
Month
EMI Amount
Principal Payable
Interest Payable
Closing Balance
1
8,787
7,962
825
92,038
2
8,787
8,028
759
84,010
3
8,787
8,094
693
75,917
4
8,787
8,161
626
67,756
5
8,787
8,228
559
59,528
6
8,787
8,296
491
51,232
7
8,787
8,364
423
42,868
8
8,787
8,433
354
34,435
9
8,787
8,503
284
25,932
10
8,787
8,573
214
17,359
11
8,787
8,644
143
8,715
12
8,787
8,715
72
0
Benefits of Personal Loan Amortization Calculator
The calculator details your loan repayment schedule, clarifying how each monthly payment covers interest and principal. It helps with effective financial planning by displaying payment distribution over time.
By using this tool, you can compare various instant personal loan options. Assessing the impact of different interest rates, loan amounts, and terms facilitates informed decision-making, aligning with your needs and budget.
Get instant and accurate results with the calculator, eliminating manual calculations. This time-saving tool ensures efficient financial planning, providing quick and reliable information.
Gain a clear view of your loan's total cost, including interest paid, using the amortization calculator. This enhanced visibility supports wise financial decisions, helping you stay on track with your repayment goals.
Wrapping up
Calculating your personal loan amortization table using the personal loan EMI calculator before you hit the personal loan apply button is crucial as it helps you understand and forecast your loan cost over time. So, make sure to calculate the table and take a good look at it before you take a personal loan.
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