Availing of credit has become one of the typical means to fulfil diverse funding needs. A significant rise in the credit consumption to fulfil expenses represents a substantial shift in consumer behaviour compared to a few years back. This trend can also be attributed to continual simplification of loan application and disbursal process over the years.
No matter how easy obtaining a loan has become, to ensure minimal hassle during repayment, one needs to practice responsible borrowing. A personal loan calculator can aid in this regard, helping borrowers predict their financial liabilities from such credits.
What is a personal loan EMI calculator?
An EMI calculator is a handy tool available online that can help a borrower determine his/her financial liability from a specific personal loan. The loan quantum, interest rate, repayment tenor and other factors can significantly influence a loan’s EMI, which is why one must use a personal loan calculator to determine their effect on these factors on one’s monthly fixed outgo.
The importance of using a personal loan calculator for financial planning
Repaying a personal loan in time is crucial not only for a borrower’s financial well-being but also to maintain his/her credit ratings. Sticking to a loan’s amortization schedule is one of the things you can do to improve personal credit score.
Thus, a borrower can limit delinquency levels using an EMI calculator. Additional benefits of the same include –
- Helps assess loan amortization schedule
Whenever one repays loans through EMIs, a portion of the payment goes towards clearing principal dues, while the remaining amount services its interest component. With each installment, the proportion of principal and interest component changes, even though the EMI amount remains constant.
As a borrower, you must appreciate this breakdown. Doing so will help you take beneficial financial decisions during the loan tenor such as opting for pre-payment options to save big.
- Calculators can help choose a suitable tenor and loan amount
While availing a low interest personal loan, one needs to pick the advance’s repayment tenor, along with the principal sum. Financial institutions often provide considerable flexibility to choose a repayment period for a personal loan. Thus, this makes it easier to find the right personal loan tenor to limit the financial burden.
When making such choices, opting for substantial loan amounts can increase liability, creating difficulties in your repayment and vice versa. As for the tenor selection, long tenor means smaller EMIs and a shorter tenor increases them. Utilizing these calculators helps make these comparisons to arrive at a suitable tenor and amount as per your repayment capacity.
- Aids in picking the most suitable lender
Personal loan terms tend to differ from one financial institution to another. A calculator can aid in comparison of the various financial products on offer, without consuming a substantial amount of time. With this handy tool, a borrower can quickly compare monthly installments and rates, ensuring that he/she picks the most economical option.
For instance, Bajaj Finserv offers personal loans of up to Rs.25 lakh with flexible tenor options. Attractive interest rates, along with instant approvals, are additional features that can help you manage your expenses conveniently.
The lender also provides pre-approved offers to simplify loan application, while making it less time-consuming. These offers are available on a range of unsecured financial products, including business loans, personal loans and more. You can check your pre-approved offers by submitting a name and contact number.
How to use a personal loan calculator for EMI estimation?
If you are planning to avail a personal loan, learning the basics of such an EMI calculator can help you in this pursuit. know how to calculate personal loan EMI. Here is a complete process that one must follow to calculate personal loan EMIs.
- Search for the desired personal loan calculator. For best results, one should look for an EMI calculator belonging to his/her preferred lending institution.
- Enter the desired loan amount in the relevant field.
- Check the interest rate applicable on such a loan. You may need to consult the lender to determine the same. Enter this rate in the calculator.
- Check the available tenor options and pick a repayment period according to your capabilities and enter.
- Lastly, click on ‘calculate’ to view the installment amount from such loans instantly.
As for availing of these fast personal loans, you must ensure to undertake EMI calculations beforehand. It not only helps in timely loan repayment but also strengthens your credibility as a borrower over time.
This article was written by Higher Writers, a company that does content writing for clients.