A personal loan can be a lifeline when you need immediate access to extra funds to manage unexpected medical expenses, make a major purchase, cover wedding costs, etc. The funds are usually disbursed quickly with most lenders releasing the money within 24-48 working hours after approval.
But since personal loans are unsecured, they have relatively high interest rates as compared to secured loans. Thus, it is important to calculate the EMIs (equated monthly instalments) before applying for a personal loan. Here, a personal loan EMI calculator comes in handy. This tool can help you determine if you can afford the monthly payments and avoid defaulting on the loan.
How to use a personal loan EMI calculator?
Most lenders offer personal loan EMI calculators on their websites. To use it, simply visit the lender website and click on the calculator. Enter the required loan amount, interest rate, and select the loan tenure. After that, the calculator will provide you with the EMI value within a split second. You can use the calculator multiple times to compare different lenders and hit the personal loan apply button only after finding the most affordable offer.
Reasons why you should calculate your EMI before applying for a personal loan
From helping you find the most affordable interest rates to planning your finances better, here are more reasons why you must calculate your EMI before applying for a personal loan.
- You can choose a favourable loan tenure
The loan tenure is the amount of time you have to repay a loan. Based on the lender and your loan amount, some loans may have a shorter or longer repayment period. By experimenting with different loan amounts and tenure lengths beforehand, you can find the plan that best suits your budget and needs.
Note that a longer loan tenure results in lower monthly payments, but you may have to pay more interest overall. A shorter loan tenure results in higher monthly payments, but you may have to pay less interest overall.
- You can find the best interest rate
The interest rate you pay depends on your loan tenure and monthly payments. Here, a personal loan calculator can be a useful tool in finding the best interest rate for your loan amount. By inputting different values in the calculator, you can test out different lenders, their personal loan interest rates and find the one that fits your budget.
- You can check your eligibility and get accurate results
By using a personal loan EMI calculator, you can assess if you are eligible for the loan or not. This will help you budget and plan for your loan repayments accordingly.
However, it’s important to note that the accuracy of the personal loan EMI calculator will depend on the information that you input. Make sure that you enter the correct loan amount, interest rate, and loan tenure to get an accurate result.
To sum up
With fast disbursal and no collateral, a personal loan helps you cover various expenses. And by calculating your personal loan EMIbeforehand, you can plan your monthly expenses in advance and create a budget to maintain a low debt-to-income ratio. This way, the chances of missing out on loan repayment are slim, which is important for maintaining a healthy credit score.