Personal Loan calculator, the credit landscape of India evolved significantly amidst the weak economy; the growth of the personal loan sector has been exemplary. Personal loans recorded 13.5% growth (Y-o-Y) in March 2021 thanks to its collateral-free features, no end-use restrictions facility, etc.
However, an irregular repayment pattern can easily lead to adverse implications, including rising bad loans or NPA in the market. Therefore, borrowers should estimate their EMIs with a loan calculator and handle their expenses accordingly to prevent such issues.
Advantages of using an EMI calculator
A personal loan can be utilized for several purposes, from meeting home renovation costs to bearing education expenses, consolidating existing debts, etc. It also allows individuals to obtain substantial funds without pledging any assets against it.
However, an irregular repayment pattern often leads one to a debt trap. According to the central bank of India, the volume of bad loans might rise to 9.8% by March 2022.
To avoid that, one must consider using a personal loan EMI calculator before availing of a high-value credit. Now, look at the additional advantages this financial tool comes with.
Decide on the loan amount and tenor
The equated monthly installment consists of three components: interest rate, loan amount, and repayment tenor. Note that the EMI is inversely proportional to the loan amount and interest rate. If one opts for a more extended repayment period, the monthly installments will be affordable. However, in that case, the interest payable will increase, making the overall loan much expensive.
Using this financial tool, applicants can calculate loan EMI for different combinations of the loan amount and tenor and interest rates and check which one seems manageable.
Learn about the repayment schedule
The loan calculator helps borrowers get an idea about their monthly installments and a detailed report of the number of EMIs they have to pay. Therefore, every time you make an EMI payment, the report will show you the percentage of your loan that has been repaid.
This particular facility will help you plan your personal loan EMI repayment better and manage your finances accordingly. You can also keep track of the due dates, the number of EMIs left, etc., and avoid penalty fees.
The manual process to calculate monthly installments is slightly complicated, which is why there is a scope for human errors. The formula used to calculate EMIs is:
EMI = P × r × (1 + r)n/((1 + r)n – 1), here P stands for principal amount, r signifies rate of interest, and n stands for loan tenor.
Making all the calculations, from EMI payments to periodic prepayments or foreclosure, using the abovementioned formula can get time-consuming. When you opt for an online personal loan, it is convenient to use an EMI calculator to get the breakup of installments.
Based on that, you can decide how much you can borrow that will not strain your monthly budget.
Comparing interest rates
The interest rate usually varies across different lenders depending on various factors, including monthly income, debt-to-income ratio, etc. Along with that, lenders check if the applicant has a history of repayment defaults. Before signing a personal loan agreement, one must meet all the parameters set by the lending institution.
Additionally, use a loan calculator to compare multiple lenders and check which one offers the lowest rates.
Get a healthy credit rating
It is imperative to know that to get the lowest interest rate on a personal loan and prompt approval from your lender; one must keep an impressive credit profile. Knowing the EMI amount before availing of a personal loan enables borrowers to prepare themselves to repay the obtained sum in time. Thus, they will not miss out on EMI payments and upkeep their credit score.
From getting affordable interest rates to prompt approval, a high CIBIL score boasts several benefits. For instance, a borrower with a CIBIL score of 800 will automatically be provided with a lower interest rate than someone with a credit score of 600.
A good CIBIL score further helps get pre-approved offers from reputed financial institutions and NBFCs like Bajaj FinServ. This makes the loan processing straightforward and quick. Such offers are available on multiple credit facilities, such as personal loans, business loans, credit cards, etc. To maximize the benefits, check your pre-approved loan offer by submitting your name and contact details.
Thanks to technological advancements, getting instant and accurate results has become more accessible. You can visit any lender’s website and find the loan calculator there. Evaluate your monthly installment amount and manage your debts accordingly by changing certain financial habits.
Since this financial tool has been introduced to facilitate borrowing decisions, there are hardly any cons you can find here.