By There are several reasons why you might choose to take a personal loan. The defining feature of personal loans is that they don’t require collateral and can be disbursed in a matter of hours, subject to furnishing the required documents and meeting the eligibility criteria.
Lending institutions don’t monitor how a personal loan is used, so you can use it any way you like. Personal loans are mostly taken for family weddings, medical emergencies, home renovation, and travel expenses. It helps cover immediate financial requirements and you can repay it in convenient installments.
Most finance company websites provide users with an effective function called the personal loan EMI calculator. It helps a borrower calculate the amount they need to pay every month based on the loan tenure, principal amount, and interest charged. These values are denoted as
- P – Principal amount
- N – Number of months in the loan tenure
- R – Rate of interest
How Does a Personal Loan EMI Calculator Work?
Borrowers might feel that once they get a loan, their problems are over. However, getting a loan is the beginning of a commitment. The challenge lies in consistently paying back the loan every month.
You should know that a loan EMI will become a monthly expense for you going forward. You will consistently need to make payments to avoid account blocks and fines.
If you don’t plan your finances, you will end up straining yourself financially and ultimately spend more than necessary to get immediate financial support.
A personal loan EMI calculator helps you calculate the loan repayment amount you need to pay each month. It helps plan your finances accordingly. Here’s how you should use a personal loan calculator:
- Enter the principal amount you wish to borrow.
- Enter the interest rate charged on your personal loan.
- Move the slider along to adjust for each value.
- According to the value assigned to each variable, a personal loan EMI calculator shows you the entire amount payable, what part of it is the interest, and the breakdown that you must pay each month.
- If you feel like the EMI is too high or that you can probably afford a higher monthly instalment, you can check the same by readjusting the sliders.
Benefits of Using a Personal Loan EMI Calculator:
There are several benefits of getting a personal loan, including immediate financial assistance, meeting your short-term goals, and living the life you dreamt of. With a personal loan EMI calculator, there are two significant benefits:
1. It helps you identify the most affordable options for loan and finance management:
Whether you take a travel loan or a home renovation loan, the rate of interest on your loan makes a huge difference. It determines the cost of your loan and varies from one lender to another. The greater your interest rate, the more your loan costs.
Using an EMI calculator can help you see how much you will spend each month including interest and the principal amount. It will help you smartly plan the rest of your finances for the month as well.
2. It provides insight into what loan amount fits your budget:
Using a credit card will give you access to rolling credit month-on-month. . Personal loans cap your credit to the amount you are approved in the month, ensuring you manage your finances and spend prudently. A personal loan EMI calculator takes this convenience one step further.
It tells you how much you can afford to pay back before you even take the loan. You get to see the monthly installment your loan will amount to and tally it against your existing income. also It allows you to add up your monthly savings and other expenses for the month, like rent and utilities.
Conclusion
With proper loan planning and financial management, you have a lower chance of defaulting on your loan payments. Take steps to improve your credit score and get a lower interest rate, bringing down your monthly EMI and your overall loan expense significantly.
Depending on the financial institution you choose, compare hidden charges like processing fees so that you get a clear picture of what your financial situation will look like.
If you are preparing to take a personal loan or travel loan anytime soon, make sure you evaluate your expenses using an EMI calculator first.
