The Importance of EMI Calculator in Getting a Personal Loan

A Personal Loan can free you from the challenging task of arranging money when needed. You may need money urgently for several reasons. A Personal Loan ensures you don’t have to run from pillar to post to arrange the funds required to fulfill your goals.

A Personal Loan EMI calculator helps you get an exact estimate of the EMI amount so that you can plan your monthly expenses like a pro and not get the ‘defaulter’ tag.

This article describes the reasons to use such a calculator before applying for a loan. It also explains the components of a loan calculator so that you can choose the correct loan amount.

What is a Personal Loan EMI Calculator?

People apply for Personal Loans for various purposes. While some need money to pay education bills, others may need it for sponsoring travel or an event. You may also need money to set up a business, repair or renovate your house, purchase a motor vehicle, buy a property, pay hospital bills, and whatnot.

Touted as the simplest of all loans, a Personal Loan comes in handy when you are tackling a financial emergency or want to avail of credit to increase your credit (Experian) score. When you avail of a Personal Loan, your lender informs you of the interest rate. You need to pay back the principal and the interest in Equated Monthly Instalment, also known as the EMI.

But, if you think that the weightage of the principal and interest are the same in the EMI, you are wrong.

Personal Loan providers generally take the interest during the initial months of loan repayment. Hence, the EMI you give in the first few months goes towards servicing the interest. Only when the interest gets settled does the loan provider start charging the principal.

Simply put, your EMI goes towards paying the interest in the first half and the principal in the second half of the loan repayment term.

A Personal Loan EMI Calculator helps you understand the EMI and its division in detail. EMI is calculated by adding the principal and interest and dividing the total by the tenure.

Knowledge of the EMI amount enables you to plan your loan better. Renowned lenders like Clix Capital provide Personal Loan EMI Calculators on their websites. You can use the loan calculator for Personal Loan to check the EMI and decide the loan amount in advance.

An EMI Calculator has three components – principal, interest rate, and tenure. Let’s understand each component briefly:

• Principal – Principal refers to the loan amount you wish to avail of. The principal often ranges between INR 1 lakh and 10 lakh.
  
• Interest Rate – The interest rate usually ranges between 14.99% and 24.99%. However, the effective interest rate depends on the borrower’s Experian (credit) score and monthly income. It is wise to inquire about the effective interest rate from the lender to get an accurate estimate of the Personal Loan EMI.
  
• Tenure – Personal Loan tenure typically ranges between 12 and 48 months. The EMI is the highest in 12 months and the lowest in 48 months.

The following section discusses the top benefits of using a Loan calculator for Personal loans.

Top 5 Benefits of Personal Loan EMI Calculator

Here are the reasons why you must use a loan calculator for Personal Loan before applying:

Quick Result

Forget about visiting the loan provider’s office and waiting in the queue since you can conveniently check the EMI using the online Personal Loan EMI calculator. It takes no more than a second to get the EMI figure.

It is possible to check the rates and apply for a loan in less than three (3) minutes if you apply online.

Accuracy

Manual EMI calculation can be flawed. But the same does not apply to online Personal Loan EMI calculators. You can feel assured about the figures displayed by the online loan calculators since the process is entirely automatic.

But remember that the figures displayed by an EMI calculator may change a little depending on the loan servicing charges.

User-Friendly

A Personal Loan EMI calculator is pretty easy to use. Even a person without much technical knowledge of mathematics or computers can use the calculator to get an estimate of the EMI.

Lenders like Clix Capital provide Personal Loan calculators for free on their websites. You can enter the principal, interest rate, and tenure to get accurate estimates of the EMI amount.

Become the Decision-Maker

A Personal Loan EMI calculator passes the decision-making authority from the lender to the borrower. You are free to change the values as many times as you want. You can change the tenure to see how quickly you can repay the loan to become debt-free.

Similarly, you may change the principal to analyze your repayment capability and arrive at an affordable EMI. The interest rate depends on your eligibility, though.

Improve Your Credit Score

Credit rating bureaus like Experian assign credit scores. The score, also known as Experian Score, speaks volumes about your credit profile and history.

A Personal Loan EMI calculator lets you tweak your monthly budget to accommodate the loan EMI. And prior planning eliminates the chances of loan default. Your credit score witnesses a healthy jump as you continue paying the loan EMIs on time.

3 Mistakes to Avoid When Using a Personal Loan EMI Calculator

Here are some mistakes you must steer clear of when using a Personal Loan calculator:

• Enter the Numbers Correctly – Any error in entering the figures might display different EMI amounts. So, be careful when entering the details on the calculator.
  
  
• Refrain From Paying Anything – Modern technology has brought free Personal Loan calculators to borrowers’ fingertips. However, if a loan provider asks you to pay an amount to check your EMI, stay away from such platforms.
  
  
• Do Not Enter Personal Details – Loan providers generally do not require any personal detail from the borrower to show them the EMI. So, be careful if a lender asks for personal information, such as phone numbers or email.

Conclusion

A Personal Loan EMI calculator is easy to use and saves time. It provides accurate results, aids financial planning, and delivers quick results. So, try using this handy tool to tackle your financial issues like a pro.