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What Are Benefits Of Using Personal Loan Emi Calculator

Posted by PrajaktaGaud in Finance on February 14th, 2020

Personal loans are extremely popular loans that lenders offer. These are unconditional and unsecured loans that make it very good for people who want funds for different purposes that may not fit into a typical loan. The application procedure for a personal loan has also become extremely simple with many lenders offering loan application and approval online through their websites instantly.

However, before applying for a personal loan, it is important to understand how much you will pay to the lender in the form of repayment. This you can do by using a personal loan calculator. This calculator is a free tool which you can use to calculate the monthly instalment amount for a given set of conditions. The calculator asks for the following inputs:

  •          Principal amount
  •          Rate of interest
  •          Loan tenure 

Once this information is submitted to the calculator, the calculator shows the monthly instalment amount and the total interest that will be paid out for the loan duration. Some calculators also have an amortization schedule which shows the breakup of instalment into principal repayment and interest payment. This tool is available for free on lender websites and online banking apps. Using a personal loan EMI calculator has several benefits:

  1.        Accuracy:

It is very accurate and gives results in a few seconds. Manually calculating the EMI and the breakup of EMI into principal repayment and interest payment can lead to errors. However, an EMI calculator will throw up correct results instantly once the three items have been entered. 

  1.        Convenience:

Using this calculator helps you find the EMI and the breakup at any point of time with ease. Comparing the EMI for different lenders becomes extremely easy when using an EMI calculator. You do not need any login or be a lender customer to use this calculator. It can freely be used by anyone just by typing personal loan EMI calculator in a search engine. 

  1.        Fix loan tenure:

A personal loan EMI calculator can be used to decide the loan tenure. Most lenders offer a loan tenure between 12 months to 84 months and usually allow the borrower to decide the final tenure. The personal loan calculator can be used for this purpose. If you opt for a longer loan tenure, then your monthly instalment amount reduces but the total interest amount paid to the lender increases. However, if you choose a shorter loan tenure, then the monthly instalment amount increases which may create budgeting problems. Using the calculator can help decide the ideal loan tenure. 

  1.        Decide lender and rate of interest:

An EMI calculator also shows the total interest paid over the entire duration of the loan. This figure changes depending on the rate of interest on the personal loan and the tenure. The calculator can be used to compare different lenders and their loan offerings and the impact on the instalment and total interest payment. 

  1.        Helps in budgeting:

Using an EMI calculator helps you find out the interest and principal repayment obligations every month. Knowing this can help you plan for prepayments or loan foreclosures, or even for a personal loan balance transfer. However, most lenders have some sort of charges for this. It is important to check these charges as well when you consider these decisions.

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