There are various financial tools very easily available in the market, which is why taking loans has become an integral part of everyone’s life to meet their planned and unplanned expenses. While a personal loan is a blessing that is quickly available for everyone to avail, it is necessary to be prepared for the monthly financial commitment that comes with it.
This is the reason why one must know the monthly repayment amount, before applying for the loan. It can be easily achieved by using the personal loan EMI calculator.
What is an EMI Calculator?
While taking the loan, the lender will mention the loan terms to the borrower, which includes the loan amount, interest rate and the tenure for repayment of the loan. Taking all these factors into consideration, one can calculate the EMI, which is the monthly debt that one is required to pay. The EMI consists of the principal amount and the interest being charged on the loan.
To calculate the EMI you can use the formula:
EMI = [P x R x (1+R) ^N]/[(1+R) ^N-1],
Where P is the Principal Loan Amount borrowed from the lender
R is the Rate of Interest
N is the number of monthly installments.
Why is the personal loan EMI calculator important?
The personal loan charges a slightly higher interest rate, which also leads to the borrower paying higher interest. To know the exact amount that one has to pay monthly to repay the entire loan amount EMI calculator is used. Some benefits of it are:
Simple, accurate, and convenient: As is seen in the formula above, the calculation for computing the EMI can be a little tricky, but with the EMI loan calculator, it can be done conveniently in no time. As the calculation is computer-based it is also 100% accurate.
Helps plan your EMI: Once you are aware of the monthly payment, you can easily plan your other expenses to make the EMI payment easy and simple. This will prepare you for the debt repayment to avoid any missed EMIs.
Make informed decisions: With the help of an EMI calculator, you will know whether you can afford it or not. To make personal loan finance more affordable, you can change the various factors impacting the EMI, and make an informed decision.
Self Learning tool: If you are taking a personal loan, it is necessary to understand its working, instead of blindly relying on the lender. The EMI calculator acts as a self-learning tool helping the borrower understand the various aspects of the personal loan. You no more have to rely on the bank or any financial professional for the calculation, just one click and you can carefully understand, analyze and plan your loan better.
Compare lenders: It is prime that while opting for a loan, you check with multiple lenders about their loan terms and then take the final decision. But how do you compare the different terms? Well, the EMI calculator will help you in recognizing which lender fulfils all your loan requirements, while at the same time offering you the loan terms that are suitable to you.
Conclusion
A personal loan is an unsecured loan that does not require any collateral. If you too are looking for a personal loan, make sure to check the EMI also through the EMI calculator and then make the right decision. Before applying for the loan, you can also work on improving the CIBIL score that will help you negotiate on the loan terms, thus reducing your monthly EMI.
As important it is to use the EMI calculator, it is important to find the right loan terms.
