IOB Personal Loan EMI Calculator - Aug 2017

Personal Loan EMI Calculator IOB

Indian Overseas Bank Personal Loan EMI

• Personal Loan EMI (or equated monthly instalment) is a fixed amount of money paid by you to Indian Overseas Bank against the loan taken. This is towards repayment of your loan to the bank. Every month, it is due on a fixed day of the month till your loan is fully paid back.
• Indian Overseas Bank offers affordable and convenient personal loans with loan EMIs as low as Rs. 2,260 per lakh for a 60 tenure and lowest rate of interest on personal loans at 12.70%.

Personal loan EMI calculator at different tenures

Personal Loan EMI for different loan amounts and tenures @ 12.70% interest rate

• From the above table, it can be interpreted that for various loan amounts taken at the lowest interest rate, EMI differs for loans taken at different tenures. Your EMI is higher when you take a loan for a shorter tenure of 2 years and is higher for a longer tenure loan of 4 years.
• Each EMI includes a component of interest payment and principal repayment. Even as EMIs remain constant, every month there is a change in proportion of interest component and principal repaid. With every EMI payment, the proportion of principal repayment in EMI keeps increasing and the interest component keeps reducing.

The above table shows that EMI paid on the loan will be lower for a loan taken for a longer tenure. However, your total interest outgo is significantly higher in a long tenure loan. In the above example, if you take a Rs. 1,00,000 loan from Indian Overseas Bank for a period of 4 years, you pay the lowest EMI of Rs. 2,260. However, you pay an interest of Rs. 35,600 on a Rs. 1,00,000 loan.
In contrast, if you take a Rs. 1,00,000 loan from Indian Overseas Bank at the lowest loan rate for a period of 2 years, you pay a higher EMI of Rs. 4,740 and pay an interest of only Rs. 13,760 which is less than half of what you pay for a 4 year loan. Hence, it is advisable to choose your loan tenure wisely as longer tenure means high interest expenses.

Factors affecting Indian Overseas Bank Personal Loan EMI

• Loan amount – This is the amount borrowed by a borrower from Indian Overseas Bank.If you apply for a higher loan amount, your monthly EMI will be high. Indian Overseas Bank gives a minimum loan of Rs. 50,000 which can go upto an amount of Rs. 1,500,000.
• Interest rate - Interest rates is the rate charged by Indian Overseas Bank on your personal loan. Higher interest rate increases your loan EMI which will increase the total cost of the loan. Lowest interest rate offered by Indian Overseas Bank is 12.70%. However, it is advisable to do complete market research and compare rates online before you apply for loan.
• Loan tenure – This is the period in which you can repay your loan in Indian Overseas Bank. Longer loan tenure means lower personal loan EMI. Generally, Indian Overseas Bank offers loan for a maximum tenure of 5 years.

Indian Overseas Bank Personal Loan calculator formula

P*r* (1+r)^n/([(1+r)^n]-1)

Here is an illustration of how Indian Overseas Bank Personal Loan EMI is calculated:

In above formula,

P = Loan amount. This can range from Rs. 50,000 to Rs. 1,500,000

r = Rate of interest per month. Current rate is 12.70%

n = tenure in month. For Indian Overseas Bank, this can be 60 months

Tips to decide the right amount of EMI

• Decide the amount you need to borrow: It is important that before approaching a bank for loan, you need to estimate the amount of loan you need to borrow. Remember personal loan is an unsecured loan which can come at high interest rates and hence, it is advisable to limit your loan amount to the minimum required. Also, based on the EMI you can service, try to opt for lowest tenure of loans as long tenure loans result in huge interest outgo.
• Review your current obligations: Before taking a loan it is advisable to do an evaluation of your current monthly expenses including any EMI obligations that you have on your current loans. The assessment will help you to estimate the amount of EMI you can pay comfortably after taking into account other obligations. Once you arrive at the EMI you can service, you can also decide on the right loan tenure.
• Calculate your Indian Overseas Bank personal loan eligibility: Your personal loan eligibility is a function an assessment of your repayment capacity based on your monthly income and other fixed obligations.
  
  • Multiplier based loan amount eligibility - Indian Overseas Bank calculates your loan amount eligibility by applying a multiplier to your net take home salary. This is the simplest method for calculating a loan eligibility used by banks. The formula used in the loan amount eligibility calculation is: Loan Eligibility = (Your Net Salary) x (multiplier of 9 to 18). The multiplier depends on the bank’s internal categorization of your employer company based on its reputation, stability, size and growth in turnover.
  • FOIR based loan amount eligibility - Indian Overseas Bank will also estimate your Fixed Income to Obligations Ratio (FOIR) to ascertain the maximum EMI you can service based on your current income and other monthly expenses. The bank applies a certain ratio to your income to estimate your monthly expenses and then adds your other EMI obligations to calculate your fixed obligations. The proportion of fixed income to your calculated fixed obligations gives your FOIR. Indian Overseas Bank lends up to a maximum FOIR of 0.45. Based on the FOIR, the bank will also estimate the maximum amount of EMI you can service as a borrower. Indian Overseas Bank's assessment may be different from your own assessment. Any differences in assessment may require you to readjust your loan amount requirement. You may also consider paying back other running short term loans to improve your eligibility.
  • Indian Overseas Bank will calculate your loan amount eligibility based on the above two methods and will sanction you a lower loan amount arrived at, by the above two methods.

Quick guide on Indian Overseas Bank personal loan

• Purpose of Loan: Indian Overseas Bank personal loan is taken to funding medical emergencies, paying additional debts, marriage expenses and other personal finance requirements.
• Key Features
  • Loan available for both salaried and self employed.
  • Borrowers within the age group of 21 and 58 years.
  • Loan amount of minimum Rs. 50,000 to Rs. 1,500,000.
  • Loan Tenure 1 to 5 years.
  • Interest rates in the range of 12.70% to 15.25%.
  • Lowest EMI of Rs. 2,260 per lakh.
• Processing Fees: Rs. 204 per lakh of loan amount.
• Special schemes: Indian Overseas Bank offers customised personal loan interest rates and schemes for special category of borrowers including borrowers working in reputed companies, banks or government employees etc.

Personal loan EMI calculator Indian Overseas Bank – How it works?

• Indian Overseas Bank personal loan calculator calculates EMI considering a combination of loan amount, interest rate and loan tenure.
• Indian Overseas Bank EMI calculator considers “reducing balance basis” and assumes that payment of EMI is made in arrears (means interest is charged for the month preceding the EMI payment date) and not in advance.

Personal loan EMI – EMI changes in case of prepayment

In case you prepay your personal loan, the outstanding balance on your personal loan reduces. Indian Overseas Bank gives you two options:

• Reduce your loan tenure and keep EMI on your personal loan unchanged: This option allows you to close your loan earlier and save the interest outgo associated with the remaining tenure. This is suitable for borrowers who feel that they have adequate income to continue servicing the same level of EMIs.
• Reduce the amount of EMI and keep your loan tenure same: This option allows you to reduce your monthly EMI and hence, increases the availability of monthly surplus which you can deploy for other purposes. This is suitable for borrowers who anticipate higher monthly personal expenses and hence, would want to reduce their monthly EMI obligations.

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