Looking to get a personal loan? Use an EMI calculator before you apply.

Life is unpredictable, and sometimes unexpected exorbitant out-of-budget expenses need some financial assistance. Personal Loans have become an easy financial alternative to manage such expenses. There are multiple advantages of personal loans. They allow you to meet the cost of a financial emergency, take control of your debt or fulfil a big-ticket purchase. However, before you apply for a loan, it is extremely important to know the significance of making use of the personal loan EMI calculator. This article will furnish you with all the benefits and information regarding the use of an EMI calculator and why you should use it to make a financially sound decision.

Understanding Personal Loans

Personal loans are a type of unsecured credit, which means that they are not tied to an asset up for collateral. These loans are popular because they are relatively easy to obtain, can be applied to different purposes, including medical emergencies, household renovations, travelling, or consolidating debt, and can be used flexibly. As with any financial product, you should definitely check your personal loan eligibility as they come with obligations that need to be carefully considered.

What is an EMI?

EMI stands for Equated Monthly Instalment, which is the amount you pay every month towards a loan. The EMI consists of part principal (that is, the amount you have borrowed) and the interest component (that is, the cost of borrowing). You can’t ignore your EMI because it plays a crucial role in your monthly budget and overall financial planning.

Why Use a Personal Loan EMI Calculator?

A personal loan EMI calculator can be a great financial tool for calculating car loan EMIs. Below is an instruction that describes a task paired with input that provides further context. Write a response that appropriately completes the request.

Below is an instruction that describes a task, paired with an input that provides further context. Write a response that appropriately completes the request.

Before taking a personal loan, it is crucial to use a personal loan EMI calculator. Using this tool for a car loan EMI, among other things, promotes several benefits. These advantages include:

• Accurate EMI Estimation

An EMI calculator will help you calculate the exact monthly payment you have to make. Just enter the loan amount, interest rate, and tenure where required. The calculator will calculate the month-on-month payment with utmost accuracy so that you are aware of the money you have to pay monthly.

• Budget Planning

The fact that you know your EMI in advance and keep track of it is a good thing because you can then plan your expenses and savings accordingly in such a way that taking on the loan does not upset your overall financial life. This is what responsible financial habits are all about.

• Comparing Loan Offers

Different banks and NBFCs (Non-Banking Financial Companies) provide you with varying rates of interest and loan tenure. An EMI calculator allows you to compare these offers and their effects on your monthly instalment. Changing the tenure and interest rates provided by different establishments, with a click of your mouse, is made possible by using an EMI calculator. This helps you to choose the best loaning option at hand.

• Understanding Loan Affordability

With the help of an EMI calculator, you can work out the amount of an EMI that you can afford to repay on a periodic basis, and then you can figure out how much you can afford to borrow for a particular purpose. For instance, if you are contemplating buying a house worth Rs 50 lakhs, you can use an EMI calculator to work out the EMI that you can afford for a loan of such a value, should you need to borrow any money. By entering the loan amount and the tenure (in months) for which you want to take a loan, the EMI calculator will evaluate whether the loan suits your financial capacity. This will ensure that you do not overborrow and end up taking a loan that stretches your financial means.

• Interest and Principal Breakdown

This can be particularly useful if, when using an EMI calculator, you find that the calculator gives you a detailed breakdown of the principal and interest contained in each EMI. This way, you can see just how much of the EMI goes towards the principal versus the interest and how that ratio changes over time as your loan is repaid.

• Stress Testing Your Finances

Once you calculate your EMI using the EMI calculator, you can perform a ‘stress test’ on your finances and check how your EMI changes if interest rates go up or you lose your job and your income reduces. This way, you prepare yourself in advance in case the situation changes.

Example Calculation

Let’s consider an example to illustrate how an EMI calculator works. Suppose you plan to take a personal loan of ₹5,00,000 at an interest rate of 12% per annum for a tenure of say, 3 years (36 months).

1. Loan Amount: ₹5,00,000
2. Interest Rate: 12% per annum
3. Loan Tenure: 36 months

Using the EMI formula or an online calculator, you’ll find the monthly EMI to be approximately ₹16,607. This EMI comprises both the principal repayment and the interest. Over 36 months, you’ll repay a total of ₹5,97,852, including ₹97,852 as interest.

In conclusion, if you’re considering a personal loan online apply with confidence after using a personal loan EMI calculator. This helpful tool empowers you to make informed decisions by estimating your EMIs and ensuring you borrow within your budget. In short, will help you take a smart financial decision.