Use an online EMI calculator to plan your Personal Loan repayment better
A personal loan calculator can help you ensure that your finances are safe, while a personal loan can help you handle emergencies and priorities with ease. This is because an EMI calculator can help you schedule repayment well before you apply for the loan, and it can even help you make strategic part-prepayments to get out of debt sooner. Since skipping a personal loan EMI will lower your CIBIL (or credit) score, it’s critical to pay it back on time. An online personal loan calculator helps you select an EMI that suits your income and financial obligations and compare the impact of the personal loan interest rate on your EMI to help you make better decisions. Please continue reading to learn more about how a personal loan EMI calculator operates and how to make the most of it to improve your repayment planning.
What is the Best Way to Use a Personal Loan Calculator?
When calculating your personal loan EMIs, an online personal loan calculator considers three factors. There are the following:
- The interest rate on a personal loan
- Sum of your personal loan that you have chosen
- Your preferred tenor (or repayment period)
To calculate your personal loan EMIs, type these figures into the calculator or use the sliders. A personal loan calculator uses the following formula:
E = P * r * (1+r) n / ((1+r) n-1)
where E represents the EMI, P represents the principal number, r represents the monthly interest rate, and n represents the tenor. If you can do the calculation manually, there is a risk of errors due to various variations. Any inaccuracy may therefore hurt your financial planning.
What does a Personal Loan Calculator Reflect?
Aside from your EMI number, the ideal personal loan calculator online also shows you the total interest payable on the loan and the total cost of borrowing, which is equal to the total interest plus the total principal. This allows you to see the larger picture of your loan more easily. Furthermore, some online calculators show the EMI repayment schedule, allowing you to clearly see the two components of your EMI, interest, and principal, over the tenor of your choice.
Using a personal loan calculator to schedule repayment.
Consider the following scenario to see how to use a personal loan calculator to schedule repayment: Let’s say you need a loan of Rs. 3 Lakhs for three years (36 months), and you’re offered a rate of 15% from one lender and a rate of 14% from another. Your EMI is 10,400 in the first case and 10,261 in the second, according to the calculator.
Choose the best financial institution.
A personal loan calculator can help you see how even a small variation in interest rates can affect your EMIs when you have several lenders each offering their own personal loan interest rate. This aids you in selecting the appropriate lender while keeping affordability in mind.
Choose an appropriate tenor.
The tenor is also relevant when it comes to repayment because, while longer terms mean lower EMIs, they also mean you pay more interest overall. Again, you can use the personal loan calculator to make a better decision about your EMIs by understanding the impact of time on your EMIs.
Choose an affordable EMI and loan amount.
To ensure prompt monthly payments, you’ll need to make room in your budget for EMIs. To do so, keep your fixed costs in mind, such as rent, everyday life experiences, another loan EMIs, and so on. Then, if you believe the EMI is too high and will put you in financial hardship during repayment, you can reduce the loan sum while keeping all other variables constant. Now you can see how a personal loan calculator can assist you in making various adjustments like this.
Choose the best time to make a partial prepayment.
Making a partial prepayment reduces your principal, which may lower your EMIs or shorten the term of your loan. If you expect investment returns or other windfall benefits, you should prepare for this when you collect your annual bonus. A personal loan calculator will help you better prepare this, as you can see that making a prepayment early in the tenor is the most cost-effective with the EMI repayment schedule.
As you can see, a personal loan calculator is a helpful tool for stress-free, accurate, and fast repayment planning. You can use it to ensure that your borrowing experience is smooth and doesn’t put a burden on your finances or cause a drop in your credit score. Apply with lenders through Finserv MARKETS for a nominal personal loan interest rate and simple eligibility requirements to enjoy a transparent and affordable personal loan repayment. Personal Loans also include up to Rs. 25 Lakhs with minimal documentation requirements. Check your pre-approved offer today to get started and apply in just two clicks.