Taking a personal loan calls for a lot of calculations regarding interest amount, EMIs, different charges, and processing fees; it can get really confusing at times. A personal loan calculator can come to your rescue in a situation as such. You can fill in certain details and gain all the specific information you may need to proceed with the plan.
Know the EMI first
The equated monthly installment or EMI is the amount you pay for a certain tenor to repay the borrowed amount as well as the interest. A personal loan EMI calculator can help you figure out the exact EMI payable depending upon the tenor and the principal amount. All these parameters may change with the lenders. Therefore it is imperative that the EMI is calculated before applying for a loan.
EMI calculation is based on a mathematical formula – [P x R x (1+R)^N] / [(1+R)^(N-1)], where P stands for the principal; R stands for the rate of interest and N stands for the tenor i.e. the number of monthly installments to be paid. As you can see the calculation calls for some serious mental work if it is to be done manually. Why not use the EMI calculator offered by lenders like Bajaj Finserv? You just fill in the parameters and get the EMI amount within seconds.
Why does it matter?
It matters for the very obvious reason that you want to manage your finances well and do not want to go for a higher EMI for the same services. Moreover, if you know your EMI then you can take the steps needed to fix your debt to income ratio. For instance, if you borrow Rs. 2 lakhs at 15% rate of interest and the tenor is 2 years i.e. 24 months, the EMI will be Rs. 9,697. Now, what if your monthly income is Rs. 25,000 and you already have an EMI worth Rs. 6,000. A fixed obligation of more than Rs. 15,000 seems too much against this income. You can simply increase the tenor to 36 months and the EMI comes down to Rs. 6,933. All this is done in a matter of seconds, thanks to the EMI calculator.
There are others calculations too make
Now that you have calculated the EMI amount, there are some other charges that you want to be sure about before applying for the loan.
- Prepayment charges
A personal loan lender charges a certain amount of money if you make prepayments. That is to pay more than one installment in a month. You may want to do this to shorten the tenor and save some money on the interest but you should also make sure that you are not paying too much on prepayment charges. You can use a personal loan preclosure calculator compare the charges exacted by different institutes and choose your lender accordingly.
- Foreclosure charges
While you are allowed to repay the borrowed amount before the end of tenor it attracts some penalties. You should use a personal loan foreclosure calculator to know the exact amount payable as foreclosure charges.
All these calculated figures come to your aid while you choose the lender and plan your repayments.
Calculating your eligibility is important too
Whether or not an amount will be disbursed to you or not depends on your personal loan eligibility. The eligibility criteria take into account your credit score, your FOIR (fixed obligation to income ratio), etc. You can use personal loan eligibility calculator to ensure your eligibility before applying for a loan. If you fall short of a certain criterion, you can work to fix that. For instance, if your credit score is too low for the requested amount, you can take small loans and make repayments on time. This will significantly increase your credit score.
Read Also: What is the Best Way to Pay off your Debts?
Your financial gain or loss depends on how smartly you handle money. The different types of personal loan calculators help you play smart when it comes to selecting a lender or deciding upon the tenor; there should be no surprises waiting for you.