Last Updated on April 7, 2024 by Umer Malik
The process of getting a personal loan has become a lot more streamlined with the online application processes. Individuals can instantly apply for a credit amount. Nevertheless, they must be cautious of their repayment liabilities while applying for the loan amount. With the help of a personal loan EMI calculator, borrowers can easily determine their monthly obligations, i.e., instalment amount. This way, they can plan repayment and avoid EMI failure.
Individuals must know how this tool helps them ease the loan repayment process.
How does a personal loan EMI calculator help borrowers in repayment?
Here are the ways this online tool can help individuals to repay their debt obligations without putting stress on their financial stability:
- Understanding the cost of the debt
Interest rate and the tenor are two major factors that influence the EMI amount. Individuals can understand the actual impact of the two parameters on their instalments using the EMI calculator. This way, being prepared, they can develop a proper financial plan to repay their monthly obligations comfortably.
They can even understand the total interest outgo using this calculator. It can be quite helpful when comparing different lending institutions’ loan offers.They also need to know how they can get a better interest rate on their personal loan.
- Knowing the repayment schedule
The calculator also generates a repayment schedule along with its amortization table. It reflects the date of paying EMIs and their monthly breakdown. This means borrowers can understand how much interest and principal components they pay with every EMI.
Generally, the interest amount stays higher in the EMIs of the initial part of the tenor, and it decreases gradually towards the end of their repayment period. With this information, borrowers can easily see how much outstanding interest component is left to be paid while making decisions regarding their personal loan balance transfer.
This balance transfer helps them move their loan balance to a different lender to get a reduced interest on the remaining loan amount and lower their EMI amount. This way, they can easily repay their remaining instalments. In this regard, individuals also need to know that they can reduce EMIs up to 45% with a flexi personal loan.
- Choosing a suitable loan tenor
The relation between interest rate and EMI amount is inversely proportional. This is why if individuals get an instalment beyond their repayment potential, they can increase the tenor to get a manageable EMI. Nevertheless, without this personal loan calculator, it may be difficult or almost impossible to know at what tenor their instalment amount will suit their repayment potential.
If the calculator displays that at a particular tenor the EMI amount is high and unmanageable, borrowers just need to gradually reduce the input value of the tenor by keeping variables of interest rate and the loan amount unchanged. With this simple exercise, they can find out a suitable loan repayment period.
Let’s assume an individual is borrowing Rs.10 lakh at an interest rate of 16%, and his/her repayment capacity is up to Rs.30,000 in a month. In this scenario, if he/she takes the loan for a tenor of 3 years or 36 months, he/she will face difficulties to repay as the instalment amount would be Rs.35,257. By increasing the tenor by just 1 more year in the calculator, he/she can see that his/her EMI becomes Rs.28,340, which is within their capacity.
Apart from these, individuals can also take a small personal loan to meet their lower credit shortages. As the amount is less in this type of personal loan, they can easily get approval on their loan application.
Alongside, individuals also need to know other ways how they can increase their chances of getting a personal loan.
How to use the personal loan EMI calculator
Individuals need to follow the simple steps mentioned below to use this calculator:
Step 1: Get the calculator from the official website of a financial institution
Step 2: Enter the inputs (interest rate, tenor and total amount of the personal loan
At this point, individuals can get how much EMI amount they have to pay and the total interest outgo from the calculator page. Furthermore, to get the repayment schedule, they need to mention the starting date of their repayment.
Apart from this, major lending institutions also provide pre-approved offers on their financial products, including personal loan, business loan and credit card. These are loan offers specially tailored for customers according to their portfolio. They can expedite their loan application process by accepting these offers. They just need to mention their names and contact details to check their pre-approved offers.
In conclusion, individuals can quickly meet their credit shortages with a personal loan as it comes with easy documentation procedures. They just have to meet the eligibility criteria set by the lenders. Nevertheless, they must be aware of their debt obligations before engaging in the loan. With a personal loan EMI calculator, they can easily understand and pre-estimate their instalment amount. This can help them make necessary financial arrangements so that the loan repayment does not become difficult.
