Despite sluggish economic growth, the unsecured credit segment, including personal loans, continued to perform well during FY2019-20. In fact, this segment is slated to grow by 10% by 2025 owing to its ease of borrowing.
Now, given the turmoil of 2020, almost 33.9% of individuals with outstanding balance had availed of the moratorium till August 31st, 2020 to settle their loans without default.
Even after that, individuals need a solid repayment strategy to avoid the pitfall of a debt trap. In this regard, they can resort to a personal loan EMI calculator to estimate their monthly instalments, alleviating any chances of erroneous calculations.
Advantages of using a personal loan calculator
Most financial institutions offer this easy-to-use online EMI calculator that helps compute the instalment amount instantly. Some of the benefits of using this financial tool are listed below.
Helps choose exact loan and tenor
An EMI calculator lets select tenor and loan amount at a combination wherein the EMI outgo remains affordable. Borrowers need to remember that a higher loan amount leads to higher interest accrual. Similarly, while a longer tenor reduces the EMI burden, it increases the overall cost of borrowing.
This online tool helps shed light on these aspects, and borrowers can adjust them to derive an EMI amount they can pay without hassle. To know the EMI amount, individuals will have to enter the principal, tenor, and interest rate applicable against a personal loan.
Understand repayment schedule
Besides the monthly instalments, an EMI calculator also offers an individual break-up of interest, principal payment and EMI outgo. Select NBFCs extend an EMI calculator with an amortisation schedule that helps understand the percentage that goes towards paying the interest and principal.
With access to this tool, individuals do not have to refer to the amortisation schedule separately. They get a detailed idea of the repayment structure of credit availed. However, to understand this, first, they need to know how to use a personal loan calculator online.
Ensure better finance management
An EMI calculator provides a precise estimation of borrowing cost that eventually allows borrowers to manage their finances better. They can calculate their FOIR and other loan eligibility factors to ensure skilful debt management.
Individuals can also use an EMI moratorium calculator if they have availed the benefits of it in FY20.
An EMI calculator can be accessed easily via the website of notable financial institutions like Bajaj Finserv.
This NBFC also provides pre-approved offers that make availing credit hassle-free and prompt. These offers are available on several financial products like personal loans, business loans, credit cards, etc. You can also check your pre-approved offer simply by entering your name and contact number.
Besides these reasons, an EMI calculator accompanies a host of benefits that individuals need to know.
- It is efficient and faster, and you need only a few seconds for the calculation.
- The chances of mistakes in the calculation are zero, unlike manual calculation.
- This financial tool is readily available online.
- You can use this calculator for free and infinite times without any restrictions.
An EMI calculator works based on the conventional formula mentioned below.
Monthly instalments = P × r × (1 + r) n/ ((1 + r) n – 1)
Here, p= principal, r= rate of interest, n= tenor.
Besides, individuals also need to know the application process of a personal loan without documents and how to use this calculator for faster calculation.
How to use an online personal loan calculator?
Follow the steps mentioned below to find out the EMI of your loan.
Step 1: Visit the official website of your lender and open the EMI calculator tab.
Step 2: Enter the loan amount and the tenor you wish to choose.
Step 3: Put the interest rate offered to you.
On entering these values, EMI, interest payable, and total borrowing cost will appear on the screen. You should also consider the factors that affect your personal loan interest rates in this regard to avail a lower interest rate and reduce your EMI liability.
Hence, a personal loan calculator helps manage the liabilities and facilitates ease of repayment, thus optimising the borrowing experience.