You work really very hard to fulfil your personal goals and family aspirations. However, a lack of budgeting skills can throw your financial plans into disarray. Just like you need a well-laid-out financial plan to manage your finances, a Personal Loan Calculator helps you to manage your loan expenses.
Read this article to understand how a Personal Loan Calculator can be your trusted aide in figuring out Personal Loan repayments.
What is a Personal Loan?
As the name suggests, a Personal Loan provides you with money to fulfil your personal financial goals. You can also use the funds to meet urgent financial needs. Generally, borrowers use Personal Loan funds for home renovations, buy a vehicle, set up a business, sponsor a wedding or trip, pay for education, or settle hospital bills.
Personal Loans are collateral free, meaning the lender never asks you to pledge any asset as a security. So, you can conveniently apply for the loan and use the money for any personal need.
The repayment term of Personal Loans usually ranges between one (1) and five (5) years, allowing you enough time to repay the loan conveniently.
EMI and The Role of Personal Loan Calculator
EMI or Equated Monthly Instalment is perhaps the most important term that Personal Loan borrowers need to understand well. The EMI becomes a part of your life whenever you apply for a loan.
Personal Loan EMI consists of two components – principal and interest. The principal is the amount you borrow from the lender, while the interest is the amount you need to pay extra for the loan. When you pay the EMI, you essentially pay a part of the principal and a part of the interest.
Personal Loan Calculators help you understand the EMI and its composition in detail. The Personal Loan amortisation schedule refers to a chart enlisting the detailed breakage of the principal and the interest amount you pay monthly.
About Personal Loan Calculator
A Personal Loan calculator needs three figures to display a near-accurate EMI amount. The three figures you must enter are the following:
- Principal or Loan Amount - The loan amount is the net amount you wish to avail of as the loan.
- Term or Tenure - Term or Tenure refers to the duration by which you plan to repay the loan. Personal Loan repayment terms usually range between twelve (12) and sixty (60) months.
- Interest Rate – Interest rate refers to the extra amount you pay to receive the loan.
Personal Loan Calculators display near-accurate results because the interest rate varies since it depends on multiple factors. For instance, the interest rate will be more affordable if your credit score exceeds 750. Similarly, Personal Loan interest rates depend on the borrower’s monthly income, age, credit history, purpose, etc.
If you approach a lender to know the interest rate beforehand, you can use it to get 100% accurate results from a Personal Loan Calculator.
Personal Loan Calculator: How Does it Simplify Loan Repayments?
A Personal Loan Calculator simplifies loan management in the following ways:
Compare Lenders Seamlessly
The interest rate is an essential determinant of your EMI. The lower the interest rate, the more affordable the EMI.
A Personal Loan Calculator lets you compare the real effect of interest rates offered by different lenders. Since these calculators are freely available on lenders’ websites, you can use them as often as required until you find the best lender.
In yesteryears, borrowers had to visit financial institutions physically and waited in long queues to get the loan estimates. Also, the formula used to calculate Personal Loan EMI was quite complex, meaning not everybody can master them.
Fortunately, you don’t need to worry about many disruptions today since an online Personal Loan EMI calculator can quickly provide EMI estimates.
Financial Planning Becomes Easy
Thanks to digital lenders, Personal Loan approval time has reduced drastically. Now, Personal Loans are approved almost instantly. However, the worst mistake is not evaluating your repayment capability and analysing your monthly budget while choosing the loan amount.
A Personal Loan Calculator lets you analyse your income and expenses and conveniently choose the EMI figure you can afford. Proper financial planning eliminates the chances of default so you can maintain a healthy relationship with your lender.
A Personal Loan Calculator is a blessing to borrowers that enable them to plan their loan repayments before submitting their loan applications. You can use it to simplify and optimise your loan to repay without hassles.