Personal loans are the apt way to get immediate funds for short-term purposes like a medical emergency, a home renovation, or some other urgent expenses. Canara Bank has several attractive personal loan schemes, and all of them afford the flexibility of various tenures and competitive interest rates. If you plan to take a personal loan of ₹2 lakh, it is important to understand how much your EMI (Equated Monthly Installment) is going to be and how the loan repayment will be spread.
What Is an EMI?
An Equated Monthly Installment (EMI) is the amount every month paid to the bank by the borrower till the loan is repaid. The EMI comprises two parts: the principal and the interest. The EMI amount depends on three major factors: the loan amount, the interest rate, and the loan tenure. To ensure repayment on time, one should know about the EMI and also use it for efficient financial planning.
Canara Bank Personal Loan Features
Canara Bank offers personal loans at interest rates starting from 10.50% per annum on a risk-based pricing depending on the borrower’s credit profile and income. Repayment options available are flexible; they can be anywhere between 12 months to 60 months and are accompanied by minimal documentation and an option for part-prepayment. These features make it easy for a borrower to give a rough estimate of their monthly budget, interspersed with addressing urgent financial needs.
EMI Calculations for ₹2 Lakh Loan
Let’s presume you take a loan for the amount of ₹2 lakh at an 11% interest rate per annum for 3 years (36 months). The EMI is arrived at by the standard method:
EMI = [P × R × (1+R)^N] / [(1+R)^N – 1]
Where P is the amount of loan, R is the rate of interest per month, and N is the number of monthly installments into which the repayment is divided.
Applying this formula for a firstname loan of Rs 2 lakhs for 36 months with interest at 11% shall give an EMI of approximately Rs 6,600. This payment over 3 years will become the total principal plus interest, wherein the borrowers will be able to organize their finances towards paying of the loan.
Loan Tenure and EMI-Time Function
The EMI mostly depends upon loan tenures. A longer tenure means a low EMI but interest accrued in the entire duration of the period will be on a higher side. Contrariwise, wherein EMI hangs higher than the interests due are lower. Taking, for instance, if the same ₹2 lakh loan is taken for 2 years instead of 3 years, the EMI might amount to ₹9,200 per month, but paying less interest will save money in the long run.
Tips to Manage Personal Loan EMI
Looking at the management of personal loan EMI, good tenure should be chosen depending on income and expenses. Part-payment whenever possible reduces outstanding principal, which benefits in both reducing an EMI and total interest. Online EMI calculators available on Canara Bank are the tools borrowers should use to plan and select the loan structure most suited to their need.
Conclusion
In case there is an urgent financial requirement, a personal loan of ₹2 lakh from Canara Bank serves as one of the cutest aven