Last Updated on March 12, 2023 by hassan abbas
Owing to a relatively easier application process and no end-use restrictions, the personal loan segment in India has witnessed a steep rise over the decades. However, such a credit option should only be availed after evaluating certain aspects, such as the repayment tenor and the applicable interest rates, to facilitate improved financial planning.
Though a personal loan is collateral-free, it is still a financial liability. Thus, defaulting on personal loan repayment can bring grave consequences, hampering one’s CIBIL score. Individuals can eliminate the chances of such errors by using a personal loan calculator.
Benefits Of Using A Personal Loan Calculator
An online EMI calculator is an indispensable tool that assists in estimating the EMIs accurately over different tenors and principal amounts, streamlining the repayment process.
Here are a few benefits of this online tool:
1. Allows comparison between lenders
Individuals can alter the loan figures with a personal loan EMI calculator until they arrive at the desired result. This would help them arrive at a loan amount suited to their repayment capacities.
This enables prospective borrowers to compare different loan offers. To arrive at a lender offering credit at the most affordable terms, one can enter the loan amount, tenor, and interest rate from various lenders.
2. Assists in making an informed borrowing decision
Using this online tool ensures that one chooses the correct loan tenor and amount, which can be easily repaid without straining one’s budget. Further, it can help one choose the correct tenor concerning the monthly EMIs. For instance, the EMI is directly proportional to the interest rate and loan amount and inversely proportional to the repayment tenor.
Thus, when individuals apply for a personal loan with a longer repayment tenor, it would lower EMIs. However, note that lower EMIs can significantly increase the overall interest burden.
So, whether one chooses to obtain a small personal loan or a big-ticket credit, this online calculator can help them make an informed borrowing decision.
3. Provides quick and accurate results
When one calculates personal loan EMI manually, he/she has to use this formula:
EMI = P × r × (1 + r)n/((1 + r)n − 1)
P = loan amount
R = interest rate
N = repayment tenor
So, if an individual plans to obtain a loan amounting to Rs.20 lakh for a period of 60 months at an interest rate of 15% p.a., they would have to pay a monthly EMI of Rs.47,580.
However, manual calculations are complicated and time-consuming and can leave errors. In this regard, a personal loan calculator guarantees accurate results within seconds. All an individual needs to do is enter the interest rate, loan amount and repayment tenor.
4. Helps plan monthly finances
A personal loan EMI calculator ensures that the borrower opts for a lender that provides the most affordable and lowest interest rate personal loan. Further, by deriving the monthly EMI outgo, it assists potential buyers in managing their finances.
Specifically, prior knowledge regarding the monthly instalments can help one plan their monthly expenses throughout the loan repayment tenor.
5. Helps maintain CIBIL score
This online calculator allows individuals to choose the right personal loan lender, which assists them in constructing a monthly budget so that they do not default on loan repayment. Thus, by making timely repayments, one can boost their CIBIL score.
Steps to use a personal loan calculator
Before knowing how to get a personal loan, individuals must assess their monthly EMI outgoes by following these steps:
Step 1: Open the EMI calculator by visiting the website of a preferred lender
Step 2: Enter a few details, such as the loan amount, tenor and rate of interest
Following this, the calculator will display the total EMI payable. In addition to this, users will be able to view their entire repayment schedule.
Steps to apply for a personal loan
One can follow these steps to apply for a personal loan online:
Step 1: Visit the official website of the preferred lender
Step 2: Locate the personal loan application and fill it out with the necessary details
Step 3: Wait for approval and submit the required documents
Following this, financial institutions transfer the loan amount to the borrower’s account within the stipulated time.
Further, to streamline and simplify this application process, several leading NBFCs in India extend pre-approved offers. These offers apply to existing customers and are available on various financial products, such as personal loans and business loans. You can check your pre-approved offer within seconds by entering your name and contact details. However, before proceeding with the personal loan application, individuals must know the factors that affect their personal loan interest rate. In addition, prospective borrowers planning to apply for this credit can know their EMI obligations in advance with a personal loan calculator. This could be an added advantage, facilitating an informed borrowing decision.
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