Applying for a Personal Loan in India: Why Use an EMI Calculator

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As financial institutions make their products more easily accessible, personal loans are becoming the most popular funding options for large purchases, debt consolidation, financial requirements, and emergency expenses. However, while an instant personal loan provides quick access to the necessary funds, you must consider several factors before applying for one. These include the loan amount, interest rates, repayment tenure, and EMI affordability. After all, a loan and its EMIs will largely influence your spending habits and lifestyle. Calculating EMIs beforehand helps plan the loan application and manage finances better. That is when a personal loan EMI calculator comes to be of great help.

Instead of calculating the EMIs manually, an EMI calculator is a more convenient way to compute the monthly installments and obtain a Personal Loan according to your suitability. Let’s look at a few reasons why using an EMI calculator before applying for a personal loan is a nice strategy.

What is a personal loan EMI calculator?

EMI stands for ‘equated monthly instalment’ that you must pay each month to pay off your borrowed loan. Each EMI consists of a small percentage of the principal and the interest amount. Therefore, as its name suggests, an EMI calculator is an online tool that computes monthly EMIs for a loan. Calculating the EMIs before applying for an instant personal loan is an intelligent way to start the process. Determining the payable EMI amount helps better understand the impact of personal loans on your lifestyle and monthly expenses.

How does a personal loan EMI calculator work?

Calculating personal loan EMIs becomes incredibly fast and simple with a personal loan EMI calculator. It uses three variables to calculate the EMIs:

  1. Loan amount: The principal loan amount you borrow is the first thing you must enter in the online calculator to determine the EMI amount.
  2. Interest rate: The calculator takes your interest rate into account, which is a percentage of the loan amount you borrow.
  3. Loan tenure: It is the loan duration, that is, the period of time you need to repay the loan in EMIs.

The mathematical formula it uses to calculate the EMIs is:

EMI = P x R x (1+R)^N / [(1+R)^N-1]

Here, P is the principal loan amount, R is the rate of interest, and N is the number of months in the loan tenure. After you enter all these details in the loan EMI calculator, you get the EMI amount.

How using an EMI calculator is beneficial?

Using a personal loan EMI calculator has numerous benefits, like the following:

Helps plan the monthly finances

Based on the results of an EMI calculator, you can modify your monthly budget to accommodate the EMIs into it. When you know how much you need to pay each month, you can plan your finances and maintain a balance between your income and expenses during the loan tenure.

Allows making an informed decision

A personal loan EMI calculator available in an online loan app helps you make an informed decision and lets you experiment with various factors affecting your EMI. Your loan amount, interest rate, and tenure are major contributors to increasing or decreasing your EMI amount. Since your payable EMI amount is directly proportional to the loan amount, the higher the principal, the bigger the EMI you will need to pay. Plus, a longer repayment tenure reduces the EMI amount compared to a shorter term that increases it.

Assists in choosing an adequate loan amount and repayment tenure

Using a personal loan EMI calculator, you can figure out the loan amount and repayment tenure after finding EMIs for different loan amounts and durations. Choosing appropriate loan variables helps you borrow an instant personal loan with EMIs that do not stress your finances and make the loan repayment more manageable.

Builds the credit score

The credit score is a crucial parameter lending institutions use to determine your credibility and offer you an adequate loan amount and interest rate. The higher the credit score, the higher the loan amount and the lower the interest rate. You can build a credit score to get easy approvals for future loan applications. Choosing the loan variables based on the EMI calculator results makes repayment easier, helping you build a score with minimal stress on your monthly finances.

Building a credit score requires responsible financial behavior, such as timely repayment of loans and credit card bills. By consistently paying your EMIs on time, you demonstrate reliability to lenders, positively impacting your creditworthiness. Additionally, minimizing the number of new credit applications and maintaining a long credit history can enhance your creditworthiness. By carefully managing these factors, you can steadily build a strong credit score.

Saves time

Making your loan decision based on the results of an EMI calculator saves you time, as it produces accurate results almost instantly. You can use the tool any number of times until you find an EMI amount you can easily afford. It saves you from complex EMI calculations without any scope for mathematical errors. An EMI calculator gives instant and accurate results concerning your monthly EMIs.

Easy comparison of loan plans

Personal loan EMI calculator results help compare various loan amounts, interest rates, and repayment tenures affecting your EMI amount and credit scores. You can compare and choose a loan plan with the lowest interest rates, appropriate loan amount to cover the required expenses, and easy EMIs you can afford to repay each month.

Using a calculator to compare loan plans is a soft inquiry that does not affect your credit score. Moreover, it has a user-friendly interface that anyone can use to calculate their EMIs. You don’t need intermediaries or loan agents to do these comparisons and calculations. That means you don’t need to go with the first loan offer you come across. You can research and compare the loan plans until you find the best option suitable to your affordability.

In conclusion, an Instant Personal Loan app provides you with the opportunity to assess your eligibility for acquiring a personal loan. This enables you to borrow funds based on your repayment capacity, ensuring financial stability. The remarkable aspect is that you can conveniently access this tool from the comfort of your home, as it is readily available on a reliable loan app or online platform. Utilize this tool to calculate your EMIs and select a suitable loan tenure with manageable monthly installments. By doing so, you can effortlessly manage your loan repayments without straining your monthly budget.

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