How an Online Personal Loan EMI Calculator Helps You Understand Your EMIs – Know Here!
Today, a personal loan is one of the attractive credit options as it is very easy to avail of with no restriction on funds end usage. Moreover, the loan offers funds as high as Rs 25 lakh with zero security or collateral requirement. However, the best way to avail a personal loan is after evaluating your needs and planning your repayment.
By thisInay, the loan acts to mitigate your requirements and does not push you into a debt trap. A personal loan EMI calculator is an essential tool from a planning viewpoint. The tool simplifies calculations and provides an accurate result. While such personal loan EMI calculations can be performed manually, there is always a chance of manual error. And the manual calculation approach is extremely time consuming. On the contrary, a personal loan EMI calculator instantly generates error-free results. Does a personal loan EMI calculator function?
A personal loan EMI calculator is a tool available online that generates your EMI values and overall interest payment based on the EMI formula.
EMI formula is:
[P X R X (1+R) N]/ [1 + R] N – 1]
P = principal or loan amount
R = Rate of interest
N= Repayment tenure or number of EMIs
How can you use the online personal loan EMI calculator?
Using an online personal loan calculator is simple and calculations can be performed in just seconds. All you require doing, iring the principal values, repayment tenure and ra, and interest rate, can be done by placing the personal loan values in the required fields. For instance, if you place Rs 5 lakh value for principal, 5 years for repayment tenure, and 11 percent p.a. for interest rate, you will get:
Loan EMI= Rs 10,871
Overall interest payable= Rs 1,52,273
Overall repayment (principal + interest component) = Rs 6,52,273
As you can view, the EMI calculator provides great insights, which can be used for planning your repayment. Additionally, once you are aware about your personal loan rate, you can tweak the repayment tenure and principal to adjust the loan as per your repayment capacity.
How can personal loan calculator help you figure out a suitable EMI?
- Adjust the repayment tenure for a comfortable repayment
Lenders offer a flexible repayment tenure of up to 5 years. You can decide your tenure as per your mandatory expenses and income. Thus, you can select a longer repayment tenure to reduce your EMIs if you already have many compulsory obligations. However, note that this approach will make your net interest component increase.
On the contrary, you strategically can choose shorter repayment tenure to keep your personal loan EMI outgo high and thus successfully keep your interest payment low. But ensure to opt for a shorter tenure only if you have the potential to repay the EMI by the due date. Otherwise, failure to meet the EMI can have a negative impact on your credit score.
- Adjust the principal component to arrive at a suitable loan structure
You even can tweak your principal component in the EMI calculator to get a manageable EMI. The main element impacts the EMI proportionately, i.e., if it is high, then the EMI is high, and if it is low, then the EMI is low. Once you are aware of how much EMI you can easily service, you can rework backwards to either increase or decrease your loan amount that you are applying for. Thus, before you click on the personal loan apply button, ensure to perform this calculation for an informed decision.
- Review the EMI schedule to plan your prepayments or balance transfer
Many personal loan calculators come with an amortization table, which provides insights about your EMI break up. In simpler terms, while personal loan EMI stays the same throughout the tenure, the principal and interest percentage change. Amount towards interest component lowers as repayment tenure falls and vice versa for the principal detail. Now, both balance transfer and part prepayment options work better when the interest constituent being repaid is very high. Thus, reviewing your EMI repayment schedule through the EMI calculator allows you to generate a better repayment plan.
Ending note
Now as you are awakened why to use the personal loan calculator, ensure to apply for a unique l loan offer that best meets your requirement. Also, apply for just the amount you require and not unnecessarily avail a higher loan amount, as it will make you repay a higher interest component.
