Introduction
Personal loans are the most common way to finance your needs when you are running short on funds. You can apply for them to fulfill any of your financial needs, ranging from a medical emergency to a vacation plan. A crucial part of applying for these loans is understanding your affordability. To check this, most lenders provide a tool called EMI calculator on their websites. It simplifies the loan repayment process for you. In this blog, we explain what a Personal Loan EMI calculator is and take you through the steps to use it.
What is an EMI calculator for Personal loans?
An EMI calculator for personal loans is a handy tool that helps you determine your equated monthly installments. It uses variables like your loan amount, interest rate, and the duration of the loan. This calculator provides a detailed breakdown of your monthly payment over the loan term. You can use this information to plan your finances better.
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With an EMI calculator, you can input three main variables:
· Loan amount: The amount you borrow
· Interest rate: The percentage the lender charges for lending the amount.
· Tenure: The period over which you repay the loan.
Based on these variables, the EMI calculator computes the EMI amount to help you plan your repayment and understand the overall loan cost better.
How to use a personal loan EMI calculator?
You can follow these simple steps to use a personal loan EMI calculator:
1. Choose a trusted EMI calculator
As discussed, lenders provide the EMI calculator tool to assist you in the process of prepayment and loan application. These tools are free to use and come with no restrictions. You can start by choosing the tool you feel comfortable using.
2. Enter the loan amount.
Enter the principal loan amount you want to borrow. You can do so by moving the slider provided. The lenders pre-set these variables based on their policies in the EMI calculator for personal loans. However, the amount sanctioned is based on your income, employment and other factors.
3. Input the interest rate.
Input your preferred personal loan interest rate. These are adjusted in the tool by the lenders according to their offers. It typically ranges between 11% to 32% per annum. You select it from the drop-down menu or the slider provided.
4. Select the tenure
The last component is the loan tenure. Generally, the duration of most personal loans in India is between one to seven years. The calculator will display this either in months or years. Choose the tenure you are comfortable with.
5. Analyse the results
Once you enter these values, the personal loan EMI calculator will instantly provide you with an EMI estimate. You also get to know about the loan amount payable. It provides the break-up of the interest amount and the principal to show accurate loan costs.
Key benefits of using an EMI calculator for personal loan
Using an EMI calculator before taking a personal loan offers the following benefits:
· Assistance with financial planning:
By giving you a tentative figure for EMIs, the tool assists with expenditure control. It helps with cutting down on unnecessary expenses and increases savings. Besides, you get to set aside the EMI amount for every month till the end of the tenure. Therefore, letting you manage your expenses with the remainder. It is even better to auto-debit the EMIs every month via banking apps.
· Helps with decision-making
The three variables required in the personal loan EMI calculator have a significant effect on the monthly instalments. The interest and principal amount directly influence the EMIs. Inversely, a longer tenure leads to lower EMIs and vice versa. Plus, the calculator lets you experiment with different combinations. Therefore, you get to try out different possibilities to select affordable terms.
· Quick and accurate results
Doing a manual calculation involves understanding the formula. It is a cumbersome process and is prone to errors. Moreover, the uncertainty leads to re-evaluation, which takes up extra time. These issues get resolved with a Loan EMI Calculator. As it is an automatic tool, it computes instantly and gives unbiased and error-free results.
Conclusion
If you are considering taking a personal loan, an EMI calculator is an essential tool for you. It simplifies the process of calculating monthly payments and gives you the information you need in seconds. You can use it to plan your application and compare loan offers. It also helps you decide on the loan amount that you are comfortable paying the EMIs on. Thus, making the whole process of loan application and repayment a breeze. What's more, It lets you estimate the loan cost and plan accordingly to repay on time. As a result, your credit score is boosted, which helps with future loan applications.
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