Use the Loan EMI Calculator to Easily Manage your Personal Loan

A report by the Reserve Bank of India suggested that the personal loan sector accounted for over 28% of the total loan book value in February 2020.

Technological advancements and ease of access to internet services have been pivotal to the surging demand and popularity of personal loans as monetary assistance to defray financial obligations.

However, the ease of availability does not correlate to the sound management of credit. It involves a well-founded decision concerning your affordability at the onset and subsequent discipline down the line. Therefore, before getting a personal loan, you might consider using a personal loan EMI calculator provided by financial institutions.

What is a loan calculator for personal credit?

Personal loan calculators are online tools that financial institutions provide for free of cost to users. You can utilize this tool to reckon the total cost of a loan.

It performs the computation based on three key components – loan amount, repayment tenor, and interest rate. Then, before you avail of a personal loan, you might use this calculator to maximize your benefits from borrowing and minimize any unnecessary burden.

What are the advantages of using a personal loan calculator?

• Compare variables conveniently

When you avail a personal loan, it is essential that you are mindful of the loan amount as well as repayment tenor. A high loan amount will result in higher EMIs and vice versa. On the other hand, a longer tenor will result in low EMIs and vice versa.

You can make use of the calculator to plan your personal loan EMIs better by comparing how different variables work out with respect to your monthly disposable income and overall financial standing. Additionally, you can arrive at your results almost instantaneously with a personal loan calculator, which allows for an expeditious comparison.

• Compare between lenders

One of the primary advantages of using a loan EMI calculator is that you can use it to compare lenders. Note that the slightest difference in interest rates can lead to considerably contrasting EMIs and overall interest accrual.

Then, you can use a calculator to compare the interest rates that different financial institutions levy and ensure such slight differences do not miss your notice. Resultantly, it facilitates your decision-making process and allows you to avail of a low-interest personal loan more conveniently.

• Minimise chances of error

You can use this calculator to compute your EMI outputs on a fast personal loan against a particular set of variables. On the other hand, you can also opt to calculate the EMI amount manually. To calculate personal loan EMIs, you need the following formula –

• EMI = {P x R x (1 + R)n} / (1 + R)n + 1 

Here, P stands for principal or total loan amount, R denotes the rate of interest, and n implies the period or loan tenor in months. 

However, when you calculate EMIs manually, you are more likely to err as opposed to using an online tool that functions mechanically on the precise formula mentioned above. The results, thus, will be more reliable and an accurate representation of future EMI outgoes.

• Budgeting

Another critical advantage of using a personal loan calculator is that you can budget your expenses accordingly to accommodate the EMI payment. That way, you can manage your personal loan EMIs more efficiently.

Furthermore, utilizing an EMI calculator also puts your mind to ease as you are well aware of your EMIs beforehand and know that availing a personal loan will not put a strain on your finances.

Leading financial institutions such as Bajaj Finserv also ensure an expeditious and straightforward loaning process with their pre-approved offers on personal loans. These offers are available on an array of other financial products, including professional loans, business loans, and credit cards. You can check your pre-approved offer by furnishing your name and mobile number. 

As for making prudent financial decisions, apart from using a personal loan calculator, you also need to make other considerations before availing a loan. It includes checking your credit score, taking stock of your financial requirements, and assessing your financial standing for a sound approach.