According to a recent report, the personal loan sector in India found a preference among millennials aged between 25-35 years, with 52% of applications from that demography. This increase in credit preference can be attributed to straightforward eligibility terms and an easy application process.
Besides, many financial institutions have shifted to the online lending process for the convenience of borrowers. Though this unsecured loan variant offers substantial credit, it obligates an individual into a repayment structure.
Failing to repay these amounts upscale the outstanding balance, gradually affecting a borrower’s CIBIL score and creditworthiness. This issue can be eliminated by using a free tool like a personal loan calculator.
This calculator helps in estimating the accurate EMI outgo with different amounts and tenors. Here are some reasons that substantiate how a personal loan calculator aids in timely repayment.
What are the benefits of using a personal loan calculator?
- Hassle-free comparison
Typically, instalments are inversely proportional to the repayment tenor. It is, therefore, critical to evaluate the exact amount for a timely payment structure. Selecting a lengthier tenor will lower the EMI payments but increase the total interest outgo. Conversely, a shorter tenor will reduce the total interest outgo but lead to higher EMI payments. In moments of confusion, individuals can find the use of a personal loan calculator to be beneficial.
Since this calculator offers accurate results, evaluating the minor difference prompted by varying lending rates and tenors can aid in making the right borrowing decision. Moreover, one can compare different lenders by checking the repayment plans and other benefits to choose the ideal option.
For instance, reputed NBFCs like Bajaj Finserv offer instant personal loans at affordable interest rates. They also extend pre-approved offers to simplify and quicken the loan application process. Such offers are available on financial products like personal loans, business loans, etc. Check your pre-approved offers by entering your name and contact number.
- Accurate calculation
Using a personal loan calculator further streamlines the process of choosing the right loan amount, which suits one’s finances and lifestyle.
Typically, this tool calculates EMI with following formula –
EMI = P × r × (1 + r)n/((1 + r)n − 1)
In this equation, P represents the principal amount, r stands for interest rate, and n gives the tenor.
Calculating the EMI manually can be time-consuming, complicated, and have multiple errors. In this regard, using a personal loan EMI calculator helps gauge the accurate results in no time. Individuals need to enter the basic details like interest rate, tenor, and loan amount, after which the tool displays the EMI payable.
- 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.
- Helps in financial planning
A personal loan calculator allows a borrower to know the exact EMI outgo and plan monthly expenses, respectively. This online calculator further helps to plan one’s personal loan EMI repayment better based on their debt-to-income ratio.
- Boosts CIBIL score
While checking points on how to apply for a personal loan online and offline, applicants might have come across the importance of the CIBIL score. Utilising this tool, one can calculate the exact monthly payment and arrange the required funds beforehand. This is a smart way of planning the budget and making healthy savings. This creates a better position for timely repayment, thereby improving their CIBIL score.
Today one can find multiple personal loan EMI calculators online for free. One can use a personal loan calculator to compare EMI amounts within minutes. An individual can enter the loan parameters multiple times and find a suitable deal.
A personal loan calculator, thus, simplifies the borrowing experience and helps in making an informed repayment.
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