A personal loan is an unsecured loan that enables you to borrow money from the lender without putting up any asset as collateral, such as moveable property, a car, or a life insurance policy. But as with any other loan, you, the borrower, are responsible for repaying the loan in a timely manner through Equated Monthly Instalments (EMIs).
An EMI is a set payment amount that a borrower makes to a lender to repay an existing loan within a predetermined period. The principal amount and the interest amount are the two components of an EMI. Interest is added to the principal amount and the two are divided equally across the loan tenure to determine the EMI.
It’s therefore important to determine what your EMI amount will be before you apply for a personal loan. The interest rates, ability to repay the loan, and loan terms are some of the most crucial things to consider when applying for a personal loan. Calculating personal loan EMI manually may not be accurate and may prove to be tedious and inconvenient. Therefore, using the personal loan EMI calculator is advised.
What is a personal loan EMI calculator?
A personal loan EMI calculator is a tool that assists you in calculating the EMI amount based on the principal amount, repayment term, and interest rate. Pre-planning and balancing the influx and outflow of money is a quick and easy way to ensure you always have money and an EMI calculator helps you do that when applying for a loan. The calculator will assist you in comprehending the impact that personal loan EMIs will have on your spending and lifestyle.
Elements of a personal loan EMI calculator
Loan tenure: The longer the loan tenure, the lower the EMI amount will be and the shorter the loan tenure, the higher the EMI amount will be. It’s important to note that different loan tenures don’t just impact the EMI amount but also the overall interest outgo. Hence, it’s essential to choose a tenure that balances all the factors.
Interest rates: One of the most crucial elements of a personal loan is the interest rate. However, many variables, such as loan tenure, affect the total interest outgo. Since the calculator allows you to choose the best EMI and loan duration, you can adjust the figures until you are satisfied and find an EMI amount you are comfortable with.
Loan amount: The EMI payable rises proportionately to the loan amount. Based on your ability to repay the loan, your connection with the lender, and other considerations, the lender will determine the maximum loan amount you are eligible for.
3 benefits of a personal loan EMI calculator
Easy to use: On their websites, most lenders provide a personal loan EMI calculator that is simple to use. You only need to enter the most basic loan information to receive immediate results. Such provisions allow you to compute the estimated EMI without providing any personal information, and you are free to use the calculator as many times as necessary without incurring any fees.
Affordability: You can compare loan offers using an EMI calculator. You can look through the repayment details for various loans until you find a solution that works for you.
Budgeting: You can accurately schedule your spending and fit it in with other monthly expenses if you know your EMI in advance. This information will allow you to think about investing in mutual funds, create an emergency fund, and give you a clear image of your financial situation to prepare for the coming months.
Since personal loans need no collateral and can be used for various things, they have grown in popularity recently. However, before applying for a loan, you should ensure to quickly determine your monthly payments and total interest charges using the EMI calculator. It is wise to consider aspects like your repayment capacity and the loan term before you apply for personal loan.