Personal Loans can be a lifesaver when you’re in need of quick funds. However, before you go and apply for a Personal Loan, it is essential to know how much you will be repaying every month, and that is where a Personal Loan calculator comes into the picture. A Personal Loan EMI calculator is a tool that assists borrowers in determining the precise EMI once they provide three EMI determinants.
How does a Personal Loan calculator work?
A Personal Loan calculator is an online tool that assists you in calculating your equated monthly installment (EMI) using three critical parameters: loan amount, interest rate, and tenure. By entering these values, you receive an immediate estimate of your monthly repayment amount, enabling you to manage your finances well.
For example, if you apply for a Personal Loan of ₹10 lakh on a 12% interest for 36 months, the EMI will display around ₹33,214 using the calculator. This transparent categorisation enables you to determine whether you can afford it or not before taking out a loan.
Benefits of using a Personal Loan calculator
- Eliminates guesswork: Manual calculation of EMI may be time-consuming and error-prone. A loan calculator saves time and ensures accuracy, making the planning to apply Personal Loan easy.
- Helps to compare loan offers: Various lenders provide different interest rates and terms. With a Personal Loan calculator, you can compare several loan offers and select the most appropriate one based on your affordability.
- Assists in budgeting: Knowing your EMI in advance allows you to handle monthly expenses effectively. This keeps you from overspending your budget while paying back the Personal Loan.
- Tailors your loan plan: The Personal Loan calculator enables you to adjust inputs like tenure and loan amount to find a repayment plan that works best for you. If you want to reduce your EMI, you can choose a longer tenure, whereas a shorter tenure reduces total interest expenses.
Tips for effectively using a Personal Loan calculator
- Input correct information: Ensure the loan amount, interest rate, and tenure are accurate to obtain valid results.
- Try different situations: Use various tenure and loan amount combinations to strike a balance between EMI affordability and overall interest paid.
- Factor in extra charges: processing charges and other charges are not always reflected in the calculator, yet they are included in the total cost of borrowing.
- Align with financial goals: Before you apply Personal Loan, ensure the repayment plan aligns with your larger financial objectives.
How does a Personal Loan calculator increase loan affordability?
Personal Loans with low interest rates are much sought after since they lower the overall burden of repayment. Calculating the optimal loan amount and tenure using a Personal Loan calculator ensures that the monthly installment does not pinch.
For instance, if you take a Personal Loan of ₹2,00,000 at an interest of 9% for 3 years, your EMI would come to around ₹6,370. But at 12% interest, the EMI would be ₹6,640, resulting in a greater cost over time.
To Conclude
Opting for a loan without knowing your EMI is dangerous. A Personal Loan calculator is an easy way as it allows you to make wise borrowing decisions, plan repayments, and maintain costs under control. Whether you’re taking a low-interest Personal Loan or comparing several offers, this tool guarantees a smooth and clear loan application process.
Even before you apply for a Personal Loan and borrow the loan amount, make sure that you use a calculator and tailor the best borrowing strategy to your needs. In this way, you could avoid future economic stress and confidently achieve your aim.
