Financial planning is nothing but a dynamic procedure that includes careful computation, preparation, and execution. With downturns and fluctuations, the world aspect of finance is transforming. As there must be zero constraints on how you want to use the money, a personal loan can offer you security-free funding for various purposes. However, like other debts, a personal loan must be repaid with interest. This is a preferred option owing to its instant disbursal, shorter tenure, attractive rate of interest, simple eligibility requisites and minimal documentation.
However, you must just apply for it after an in-depth evaluation of your financial scenario. Before accepting the personal loan offer, you must use the personal loan calculator to estimate the EMI you may have to bear every month.
What is a personal loan calculator?
As mentioned previously, a personal loan can be taken up for any purpose. This security-free loan has a limited processing time, hassle-free process, and attractive rate of interest. However, a personal loan has a specific repayment period during which you need to pay your regular EMIs. Efficiently estimating your EMIs can be intimidating. Here’s where a personal loan calculator can be helpful. A personal loan calculator is nothing but a specialized instrument for computing the amount of monthly EMIs you should pay. Such EMIs have an applicable interest rate and loan tenure. A personal loan calculator is usually free to use the tool on any lender’s website. You can use it any time of the day for any number of times. For this, you do not require going to a loan agent or any lender’s office to figure out how much it will cost you exactly and whether it will perfectly fit your budget. Let’s understand how the tool is useful and how it can benefit you –
How does the personal loan EMI calculator function?
Listed here are 3 crucial steps to compute your EMI using the personal loan EMI calculator.
∙ Input your desired loan proceeds
∙ Set the repayment tenure
∙ Choose the estimated rate of interest
Once you have inputted all these values, you will be provided with your EMI proceed along with an extremely detailed monthly schedule for repayment. Now, let’s examine the various ways in which it simplifies your financial planning.
Accurate and quick results –
Computing using paper and pen is extremely time-consuming and highly prone to errors. However, an online personal loan calculator provides accurate real-time outcomes. It utilizes the EMI formula as an algorithm and constantly produces an error-free outcome in seconds. Moreover, this instrument is easy to use and can be utilized as many times as possible at zero charges. For computing your loan EMI, you simply need to input your principal proceed, rate of interest and repayment tenure of your choice in the personal loan EMI calculator. Also, you can plan out your repayments in minutes using the results on the calculator, even before you place an application for the loan.
Assists in determining your amount and repayment tenure –
You can simply adjust the figures of the loan parameters as many times as you need when using this online calculator. For instance, if your loan EMIs are very costly, you can reduce the loan proceed, lengthen the repayment tenure, or do both to make it more affordable. Remember to keep in mind that the higher your repayment tenure, the more your overall interest repayment. While shorter tenures would enhance your loan EMIs, you would be able to restrict the net interest that you pay. Ensure to adjust your principal values and tenures until you approach a structure that is feasible financially, depending upon your repayment potential.
Automated amortization schedule –
A personal loan EMI calculator for sure goes a step ahead to show how your payments would be amortized. It permits you to see how much of your principal is being repaid every month. Moreover, understanding your repayment schedule would assist you in better organizing your finances as well as determining you the best time to pre-close or prepay your loan in future if you wish to do this. When you know how much you will require to pay monthly out of your paycheck, you will get a clearer picture of how much you will require to save to reach a specific goal. This allows you to set a suitable budget around EMI and assures that your monthly savings will stay on track and your finances will not suffer.
Assists in picking the correct lender –
The calculator takes your lender’s rate of interest into account when computing your result. Even a minor change of about 0.5 per cent can have a considerable impact on your payments, and the EMI shown will reflect this. You have the option to choose the most inexpensive creditor by keeping your term and loan amount constant and inputting different rates of interest on the personal loan in the calculator.
Once you narrow down your list of suitable lenders, ensure to look up the different choices available to make sure you witness a positive borrowing experience thoroughly.
Visual representation of the interest and amount payable –
Your computed information is even displayed on the pie chart on the lender’s website, permitting you to view how much of your whole payment is spent on principal vs interest at a glance. For instance, if you avail Rs 10 lakh as loan amount for a tenure of 4 years at 18 per cent p.a. as interest rate, the overall amount you owe will equal to around Rs 14.10 lakh. A personal loan EMI calculator will help show you the split between the principal and interest components.
Maintain a good credit score –
You might determine your exact monthly payment and budget using the personal loan calculator to avoid any defaulting. Using the calculator, you can understand your personal loan eligibility. Upon knowing your eligibility, you will be in a better position to decide the amount you must allocate towards EMI based on your earnings. Ensure to opt for an affordable EMI schedule. Doing so will allow you to keep your credit score in a good position.
Ending note –
A personal loan calculator is an automated instrument that helps to simplify all your personal loan computations and eliminates the requirement for a physical calculator or approaching the lender to understand the calculation. You can simply, from the comfort of your home, visit any lender’s website to use its calculator and know your repayment potential.