A personal loan has particularly gained popularity among millennials in recent years. This credit facility offers a substantial amount against minimal documentation and eligibility criteria. Though collateral-free, a personal loan obligates a borrower into a monthly repayment structure. Failing to pay this amount can impact credit score and push one toward debt traps.
Potential borrowers need to evaluate their financial structure to avoid such circumstances. Using a tool like an online personal loan calculator helps secure a favourable loan in this regard.
Some of the advantages of using this calculator are mentioned below.
What are the benefits of using a personal loan calculator?
· Accurate results
Manual calculations can be tiresome and filled with errors, whereas an online personal loan calculator can offer accurate results within seconds. Typically, this tool functions on a pre-set EMI formula. This feature makes it compatible to be used multiple times without paying additional bucks. Based on the tool being used, a user needs to drag the data scale or input required information like interest rate, principal amount, and tenor. This tool generates detailed results based on different combinations and parameters.
· Segregates the tenor and EMI payable
Individuals can change parameters in the calculator multiple times for desired results. This is an intelligent way to understand how to manage personal loan EMI repayment efficiently. One can adjust the loan amount or extend the repayment tenor to reduce the EMI payable. However, it is essential to evaluate total interest payable as a longer tenor can impact its value. On the contrary, a short tenor brings down the total interest payable significantly but increases the EMIs. Hence, adjusting values on the online personal loan calculator allows individuals to assess their financial capacity against the borrowed sum.
· Evaluates the exact amount payable
Understanding the repayment breakdown is again essential for an informed borrowing. This is vital when borrowers decide to pre-pay outstanding balance with a surplus. Hence the calculator breaks down the personal loan EMI amortisation schedule for a detailed estimation. Individuals can check the data and arrange funds accordingly.
· Graphical representation of the amount due
An online personal loan calculator helps borrowers understand the monthly payable and due amount via visual representation. The data is shown in the form of a graph, pie chart, etc., that shows the amount utilised to pay principal and interest separately. For instance, on a loan of Rs.2 lakh for 60 months at an interest rate of 12%, the total due would be Rs.2,66,934. On this amount, 75% goes towards principal while 25% towards interest. Potential borrowers can use a personal loan calculator to understand this breakdown and plan whether to proceed with the borrowing or not.
· Helps in finding the right lender
Comparing different lenders is the first step to successful credit borrowing. This calculator aids in finding a low-interest personal loan by entering the lending rate and other variables. Typically, finding a marginal 0.5% variation can help in making lucrative savings. By entering different combinations like tenor, loan amount, and interest rate into the calculator, one can zero in on an an affordable loan offer. After shortlisting the viable options, individuals must also check the customised features to leverage the scale of benefits.
For instance, reputed NBFCs like Bajaj Finserv provide pre-approved offers on their selective financial products like business loans, personal loans, and more. This feature eases out the loan application and processing. Check your pre-approved offers today by entering a name and contact number.
Being simple in usage, an online personal loan calculator can aid a borrower to manage his/her finances efficiently. With digitalisation, one can find multiple lenders offering this tool for free. However, one must not remain fixated merely on the EMI and interest payable but also account for additional charges required to arrange funds.
