A personal loan is a type of unsecured loan, where the lenders can borrow a loan amount without keeping any collateral guarantee for it. Due to its unsecured nature, it is one of the most popular loans. The biggest advantage is that these loans are not monitored by the creditors. The personal loan EMI calculator can help in determining the rate of interest and also the total payout amount payable to the creditor. They essentially help in tackling credits with a high rate of interest. Personal loans are easy to attain but like any other loan amount. They need to be paid off timely to maintain a good credit score. Here’s how a personal loan EMI calculator will help.
Evaluate the Rate of Interest of the Credit
The first thing that you need to do is evaluate the rate of interest of the credit limit you wish to avail. This will give you a foresight of the monthly EMI rates that you have to pay to the creditors. Thorough knowledge of the cash-outflows well in advance can help you control your finances better. The personal loan EMI calculator not only gives the exact amount that needs to to be paid each month but also the total amount that you will actually be paying to the creditors.
Using the personal loan EMI calculator gives you the exact measure of the affordability factor of the loan you wish to avail.
It Gives the Breakup of the Total Amount
A personal loan EMI calculator will tell you the exact amount that needs to the paid as the processing fee, the monthly EMIs and the total interest that you will pay with the principal amount towards the end of the loan tenure.
It is a loan tracker that shows the progression of your loan amount. It gives you a clear idea of how much you will be paying back at the end of every financial year.
Helps You Forecast Your Monthly Expenses
The calculator can be great for budgeting and planning out your finances well in advance. This will help you in making well-informed decisions so that you can cushion any financial pitfall comfortably.
It Is Precise, Fast and Efficient
Calculating the EMI manually would require you to solve the complex equation given below:
E = P*r* (1+r)^n/([(1+r)^n]-1), where P, n, r stand for the principal amount, tenure period, and rate of interest respectively. Arriving at the EMI amount will take time and may have errors if done manually. The calculator is based on the same formula and gives the results within a matter of a few seconds.
If you plan on availing a personal loan, there is no better way of doing so other than by first calculating the EMI using the calculator. Further, you can compare the EMI from all the creditors and make the final decision. It is critical to understand the repayment capacity with the help of EMI calculator, as you need to maintain a good credit score for the future.