Bank of India is one of the best public sector banks in the country. It was established in the year 1906 and remained a private bank till 1969 when it was one among the nationalised banks. The first ATM in 1989 was introduced by the Bank in its Mahim branch, Mumbai. The PAN India presence, along with an international presence in over 60 countries, makes it one of the best banks in the country.
Combined with modern technology and fair principles of banking, the Bank of India is one the most trusted banks in the country. It caters to commercial, corporate and retail customers and has several retail loan products for the convenience of the customers. Some of the popular retail loans of the Bank of India are Home Loans, Vehicle Loans, Education Loans etc. One another popular loan of the Bank of India is the Personal Loan owing to its versatility in terms of usage. The loan is provided at an attractive rate of interest starting at 12.35% p.a. The rate of interest depends on the Credit Score, income, repayment capacity and loan amount. The Bank also provides the Bank of India Personal Loan EMI Calculator to know the EMI before applying for the loan.
Bank of India provides a Personal Loan EMI Calculator for you to evaluate the EMI before applying for the loan. This will help you to be aware of the loan amount you are eligible for the EMI that you can afford. By submitting a loan application for the amount you qualify for, you will avoid the chances of rejection of the loan application. Here you must know that every rejected application will bring down your credit score by specific points. To use the BOI Bank Personal Loan EMI Calculator, you will have to follow the steps given below.
The EMI is calculated on the basis of the inputs provided. If you need accurate results, you should ensure that the information given are precise also and as per your requirements.
The universal formula for the calculation of Personal Loan Interest Rate is
EMI = [P x R x (1+R)^N]/[(1+R)^N-1] where,
P is the principal
R is the rate of interest
N is the tenure in months.
It is a complex formula that consumes a lot of time if calculated manually. The calculation will be made easy if done using the BOI Bank Personal Loan EMI Calculator. The method of interest application also is essential. Some of the banks apply the flat rate method where the interest is applied on the originally sanctioned amount irrespective of the periodical repayments made. This method of interest calculation makes the loan dearer. Bank of India applies the reducing balance method of interest calculation wherein the interest is applied on the reducing balance. If periodical prepayments are made, the cost of the loan will come down to a large extent when this method of interest application is adopted.
Know in detail: Simple Interest Formula Calculation
If you avail Bank of India Personal Loan, you will have to make the repayments in Equated Monthly Instalments for tenure opted. You should also be aware that while a certain percentage of interest will be charged for the amount borrowed, and the EMI will constitute both the interest and the principal payable during the repayment period. Once you agree to borrow, you should be able to make the EMI payment consistently without a break. For this, you should know the EMI beforehand to assess your repayment capacity. The benefits of using the Bank of India Personal Loan EMI Calculator for the purpose are given below.
Impulsive borrowing without proper assessment can land you in severe financial trouble. If the loan amount borrowed is beyond your repayment capacity, there are all chances of defaulting in repayment. This will have serious repercussions, including a dip in the credit score. A good credit score is vital if you have to be eligible for credit in the future. Using the Bank of India Personal Loan EMI Calculator to know the EMI before applying for the loan has several advantages.
Helps plan your monthly budget: On availing of the loan, you will enter into a financial commitment that has to be honoured consistently throughout the repayment period. If you know the EMI beforehand, you will be able to assess if you can afford the commitment without disturbing the other mandatory expenses.
Avoids rejection of loan application: Once you arrive at the affordable EMI, you will be applying for the amount you are actually eligible for. This will prevent the chances of loan application rejection. Every rejection will be recorded in your credit history, and it will bring down your credit score.
Can make adjustments in parameters: You can make adjustments in either the loan amount or the tenure to make the EMI affordable.
Can Compare Deals available in the market: You will be able to compare the EMI versus the deals in the market and go for the best sale that is economical and affordable.
A well-managed budget is one that can accommodate all the expenses within the monthly income. To maintain the balance, you should ensure that whenever you intend to borrow, the EMI should be such that it can be consistently serviced without interrupting your other monthly expenses. You will get entangled in a debt trap if you borrow without sufficient planning.
Before availing of any kind of loan, including a personal loan, you should ensure that the EMI is within your reach and fits your budget. Estimate the budget available before calculating the EMI to ensure that the EMI is within your repayment capacity and satisfies the debt to income ratio stipulation. To arrive at the EMI, you should use the BOI Personal Loan EMI Calculator. You can try several combinations of tenure and loan amount till you arrive at the EMI that fits your budget. This step is essential before applying for a loan to avoid being head over heels in debt.
The loan amount, interest, and tenure are the three factors that affect the personal loan EMI.
Loan Amount: The amount that is sanctioned as per your eligibility is the loan amount. The higher the loan amount, the higher will be the EMI. It is advised to borrow only as much as required even if you are eligible for a higher amount to minimise the cost of the loan.
Interest: The higher the rate of interest, the higher will be the EMI and vice versa. The type of interest also determines the EMI. If you have availed of the personal loan at a fixed rate of interest, the EMI will be consistent throughout the repayment period, and it will be convenient to make an allocation for this in your budget. But if you have availed the loan at a floating rate of interest, then the budget allocated for the EMI should have some buffer as you may be in for surprises when the EMI suddenly increases when the rate of interest also increases and might stretch beyond your repayment capacity resulting in EMI missouts.
Tenure: The repayment period offered for the loan is the tenure. The higher the tenure, the lower will be the EMI and vice versa. If you choose a higher tenure for the EMI to be within your reach, the total cost of the loan will be higher. Selecting a higher tenure initially and reducing it by making periodical prepayments is prudent management of finance. You will have a dual benefit, i.e., EMI, to fit your budget with a reduced overall cost.
If you conclude that the comparison of interest alone will reduce the cost of the loan, you are mistaken. While you compare the cost of the loan with various interest rates, you fail to understand that there are several other components that hike up the cost of the loan. The EMI calculator will give an account of the total interest for a loan with the given parameters but will not tell you about the following.
Processing charges: Processing charges at 0.50% to 3% will be charged on the loan amount by the banks/NBFCs while accepting the loan application. These processing charges are generally non-refundable. Some of the banks collect the charges at the time of receiving the loan application, while some of them collect the charges on approval of the loan application.
Prepayment charges: Prepayment charges ranging from 2% to 5% will be collected on the amount prepaid. Some of the banks do not collect prepayment charges for the loans availed by individuals at a floating rate. For others, the charges are collected at the rate mentioned.
Delay penalty: Delay penalty of 2% of the delayed EMI for the delayed period will be collected in addition to fixed charges for every instance that depend on the EMI amount.
If you have chosen a higher tenure to accommodate the EMI within your budget, you can make prepayments periodically and opt for a change in the tenure to lower the cost of the loan. If the EMI opted initially goes overboard due to other additional expenses that have cropped up midway, you can make a prepayment to the loan amount and opt for rescheduling the EMI to fit your monthly budget.
You can opt to make the repayment by automatic debit to your bank account by executing the NACH mandate. You can also opt for registering ECS to the account from which the EMI has to be debited. You can even make a cash payment by visiting the nearest branch of the Bank. But you will have to bear the cash handling charges for payment through cash.
The input required for the calculation of EMI is the loan amount, rate of interest and tenure.
The factors that are considered to offer a lower rate of interest are the credit score, income, type of employment and the existing liabilities. If you have several unsecured loans, then in the perspective of the Bank, you are credit hungry and do not have your own resources to fund any of your requirements. The internal risk rating will not be so favourable, and your loan will end up being costlier.
You will be eligible for a personal loan even with a low credit score if you can provide collateral security by way of gold, LIC bonds, Fixed Deposits etc.