Our financial condition determines our lives. If we have enough money, then our life is smooth and happy, but if we are broke, the rest of our life seems like a dark tunnel which we can’t escape from.
To avoid such situations, it is important to plan our finances. For example, if you want to get a personal loan, it’s important to know how much you need to pay monthly towards EMI so that you can plan your budget accordingly. This blog looks at how a personal loan EMI calculator helps you in financial planning.
How Does a Personal Loan EMI Calculator Work?
A personal loan EMI calculator is a simple online tool that can help you calculate your equated monthly installment (EMI) in just a few seconds. All you need to do is enter the loan amount, interest rate and tenure, and the calculator will do the rest.
The EMI is the monthly repayment you must make towards your personal loan. It is calculated using a certain formula, which takes into account the principal loan amount, Interest rate and loan tenure. The lower the EMI, the easier it is to repay the loan.
The personal loan EMI calculator can be used for both fixed and floating-interest-rate loans. For fixed-interest rate loans, the EMIs remain constant throughout the tenure of the loan, while for floating-interest rate loans, EMIs may vary depending on changes in market rates.
Here are some ways in which a personal loan EMI calculator can be effective in financial planning:
- Simple and Easy to Use
The first thing that makes the EMI calculator so popular is its simplicity and ease of use. You do not need any special skills or knowledge to use this tool. All you need is basic knowledge of how interest works and how payments are calculated, along with some basic arithmetic skills such as addition and subtraction. You can quickly calculate your EMIs using online calculators and get an estimate of your monthly loan repayments.
- Accurate Results
The most important purpose of using the personal loan EMI calculator is to get accurate results. This is because when you know your exact repayment schedule, you can easily plan your finances accordingly. For example, if you have an expensive car loan and you want to buy another property soon, then it would be good if you plan your expenses accordingly so that they do not exceed your income level.
- Helps Determine Your Repayment Capability
A personal loan EMI calculator can help you determine whether you can afford a loan. The tool can help you determine the amount of money that you need to borrow, the interest rate on which you will be charged, as well as your monthly EMIs for the next few years.
By using this calculator, you can also determine how much of your income will be used in repaying the loan. This is important because it determines how much of your income will be left for other expenses like groceries, rent, transportation and other essentials.
- Aids in Choosing the Most Affordable Lender
A personal loan EMI calculator is a great tool to use when you are looking for the most affordable lender. By inputting your loan details, you can see which lender offers the lowest monthly interest rate and flexibility with their repayment options. This can save you a lot of money in the long run.
There are many personal loan lenders out there, so it can be hard to know who to choose. However, by using a personal loan EMI calculator, you can quickly and easily compare lenders to see who offers the best deal. This is a great way to save money on your personal loan.
Watch Out for the Following Pitfalls Before You Use an EMI Calculator
- Consider the Total Cost of the Loan and Not Just the Interest
EMI calculators only show the amount of interest that you will be paying over the course of your loan period. But this is not all that you have to pay for! You also need to consider the total cost of your loan — including principal repayment, documentation charges and other fees — before taking any decision.
- Don’t Mistake the EMI calculator to be the Eligibility Calculator
An EMI calculator is a handy tool that allows you to calculate your monthly loan repayments. However, it is important to note that the EMI calculator is not the same as an eligibility calculator. While the EMI calculator can give you an estimate of your monthly repayments, the eligibility calculator will determine whether or not you are eligible for a loan.
If you are looking to apply for a loan, it is important to use the eligibility calculator to see if you meet the necessary criteria. The eligibility calculator will take into account factors such as your income, employment history and credit score. Once you have determined that you are eligible for a loan, you can then use the EMI calculator to estimate your monthly repayments.
Author bio:
Tanvi Kaushik specializes in Content Marketing and works with the Digital Team at KreditBee – India’s fastest personal loan platform where self-employed and salaried professionals can easily avail of personal loans in just a few minutes when in need of quick funds. Tanvi writes to-the-point articles on personal finance and budgeting which are truly appreciated by her readers. She is committed to making money matters easy to understand even for the layman. Her commitment to her work doesn’t stop her from pursuing her hobbies of hiking, trekking and going on adventurous trips.
Press Release Distributed by The Express Wire
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