Personal loans are the sweetheart of all when the need is to take a loan in cash at once without giving away any asset. For covering wedding expenses, settling dues, or pursuing higher studies, personal loans will help you meet your financial needs. But the plan is to arrange your loan repayment in such a manner that it would not cause you any kind of financial strain. That’s where an EMI calculator personal loan comes handy. It will assist you to find out your precise month on month payment and choose the lowest cost and optimum terms of the loan.
In this article, we will inform you how an EMI calculator assists you, what you should remember while choosing a loan, and how with an EMI calculator’s assistance your budgeting will be simple.
What is a Personal Loan EMI Calculator?
Let us first see what an EMI calculator is before we proceed to discuss its benefits and advantages. EMI stands for Equated Monthly Installment, or the sum of money paid in advance each month by the borrower to pay off the interest and the initial amount via a set repayment schedule.
Personal loan EMI calculator is a simple web tool via which you can determine your monthly installment in seconds.
By putting values like borrowed amount, rate of interest, and repayment period, the borrower is able to receive a direct calculation of his/her value of EMI on a month to month basis. It is a facility within easy reach and made available free of cost for most of the time on bank websites, financial institution websites, or third-party websites offering loan-based facilities.
Why You Should Calculate EMI Before Lending
1. Better Budget Planning
Personal loans come with a fixed tenure and, if you don’t keep your EMI details in sight here, you might end up carrying a big burden later on.
By using an EMI calculator, you are able to calculate if you can afford paying the EMI along with your other spendings or not. By doing so, you are able to keep your planning as precise as possible since you never fall into defaults in the long run.
2. Aversion to Overborrowing
People take loans expecting to fulfill their requirement. The rare instance of borrowing, however, results in high EMIs that prove difficult to repay. By applying an EMI calculator for personal loan, you can determine the optimal amount of loan one can borrow and repay.
3. Cost of Borrowing Awareness
EMI calculator also informs you about the monthly installment and apart from this gives you vital information such as total interest and loan cost. The information helps you compare and select a low-interest personal loan that never makes you encounter money problems in the future.
4. Easy Loan Comparison
When comparing personal loans from other lenders, an EMI calculator allows for comparison of interest rates, tenure, etc. Changing parameters and seeing the effect on the EMI, you can decide on whom is providing the best reasonable term of a loan.
How an EMI Calculator Works
An EMI calculator uses the straightforward formula with the original loan amount, rate of interest, and the length of time for arriving at the monthly installment. The formula is:
EMI=P×r×(1+r)n/((1+r)n–1)EMI = P × r × (1 + r)^n / ((1 + r)^n – 1)EMI=P×r×(1+r)n/((1+r)n–1)
- P = Loan amount
- r = Monthly rate (Annual rate/12)
- n = Loan term in months
Although the formula seems so complex, the calculator saves time on calculation in the form of instant accurate solutions. Perform an experiment in imagination to comprehend how it is achieved.
Assume you borrow a loan of ₹500,000 with a rate of interest of 10% per annum and the loan period is 5 years (60 months). Insert these values in an EMI calculator, and it will come back to you with the EMI of ₹10,624. It’s your decision whether this loan will suit you or not.
Applications of an EMI Calculator for Personal Loan
EMI calculator is helpful in certain aspects that aid in loan management and repayment planning to a large extent. Let us see the advantages:
1. Saves Time
EMI calculation involves time-consuming number work and monotonous if done manually. An EMI calculator eases it, and one gets the results within seconds. This helps the borrowers in making spontaneous decisions without the hassles of long number work.
2. Clarity and Transparency
You must also know the repayment period before you sign up. The EMI calculator makes you aware with absolute transparency by providing you with the precise breakup of interest and principal, thereby allowing you to make an informed choice.
3. Leading You in Making the Correct Decision in Regards to Low-Interest Personal Loan
Since we have comparability of rates for personal loans, it is a matter of choosing the lender. The rate changes can be fed into the calculator and you will have an idea of who is offering low-interest personal loans and minimal EMIs.
4. Stress-Free Loan Planning
One of the largest reasons people eschew taking personal loans is to avoid over-burdening themselves with finance. With improved EMIs calculation, you can select the tenors of repayment based on your way of life and income so there is no stress and no over-burdening of finances.
5. Flexibility in Structuring Loans
Calculator is used to check loan repayment amount, term, and interest rate figures. You can attempt to experiment with differential loan tenures so that EMI levels can be reduced or find longer tenure periods simpler to repayment.
Low-Interest Personal Loans Tips
EMI calculator will only work if complemented by smart research in order to discover low-interest personal loans. Below are some tips to get low-interest lending terms:
1. Compare Lenders
Don’t settle for the very first loan offer. Bank and NBFC offers are similar so that it becomes convenient for you to opt for personal loan interest rates that are competitive.
2. High Credit Score
Institutional credit is your credit-worthiness and payment history, so that it becomes easy for it to be inexpensive for you to pay low interest personal loans.
3. Seasonal Offers
Interest charges are reduced or charges waived by banks at festival times or under campaigns. These offers can reduce the cost of the loan by a considerable percentage.
4. Choose a Shorter Term
The length of time for which a loan is taken also decides the interest to be paid later on. Longer periods lower the value of EMI but add up to total interest paid. You will pay less in smaller amounts if you opt for a shorter period, but that will force you to pay a little more every month.
How to Use EMI Calculator Effectively
For your loan planning exercise with a personal loan EMI calculator to go as smoothly as it can, remember the following:
1. Adequate Input Parameters
Use stated or specified values by the lender as input loan amount, interest rate, and tenor. It makes calculated EMIs by the calculator accurate and real.
2. Scenario Analysis
Run various scenarios by changing the loan amount, tenor, and interest rates and see how your repayment options are different. This helps you have better control over your options of loans.
3. Verify Credibility of the Lender
Once you have computed your EMI and checked the terms and conditions and the credibility of the lender you are choosing prior to subscribing so that you can make sure you’re entering into a credible deal.
Conclusion
In a hectic day-to-day routine life, employing an EMI calculator for a personal loan can revolutionize lending money totally. With precise and authentic EMI calculation, the software reminds the borrower of a loan savvy in his mind regarding installment payments, contrast loans, and plan his finances accordingly. Availing a low-interest personal loan or comparing certain repayment plans, the calculator assists in making a smart money choice.
Employing with keen research and comparative analysis of the terms of the lender, this application is a ray of hope of aversion to taking huge loans and allows you to take only those loans in the comfort zone of your repayment capacity. Use the EMI calculator today and make your loan planning simple and attain your financial goals with confidence!
