Whenever a customer faces some urgent needs or wants to fulfill his or her personal needs, the first thing that crosses into mind is to go for a Personal Loan. The reason: Personal loan can be taken without pledging any security or collateral against the loan amount. But there is an important thing that a lot of people tend to miss before going for a personal loan — Estimation of EMI with the personal loan EMI Calculator. You must be thinking about what this EMI amount is?
Well, when you opt for a personal loan, lenders provide you a fixed tenure of 12 to 60 months that customers can choose according to their convenience. So, EMI is nothing but a short form of Equated Monthly Installments that you need to pay every month towards loan repayment. EMI consists of a portion of both your principal and interest amount. That’s why, before going for a personal loan, it is important to know the EMI amount that you will be able to pay. Missing any of the repayments can negatively impact your credit score. We will tell you everything about the role of Personal Loan EMI Calculator in knowing the EMI amount and other things. So, keep reading to know more!
How to use Personal Loan EMI Calculator?
Now, coming to the most important thing of EMI Calculator — how can normal people use this amazing tool? This question must be coming into your mind. Well, you don’t need to worry as we are telling you the whole process Like any other Calculator, you will need to fill in a few basic details into the personal loan EMI Calculator. On feeding these details into the calculator, you will get the EMI amount, interest outgo and total payable amount.
These details are Required Loan amount, Personal Loan Rate of Interest and Required Tenure (12 to 60 months). The loan amount and rate of interest tends to change from one bank to another. Do remember that personal loan interest rates depend on several factors such as Applicant’s Age, Monthly Income, Residing Location, Existing Obligations, and most importantly, Credit Score. The final rate will be decided after assessing all these factors.
Role of Personal Loan EMI Calculator in choosing Lower Interest Rates
Now you have known how personal loan EMI Calculator functions, let’s try to understand how it can help choose lower personal loan interest rates. First and foremost thing that you need to know that interest rates directly affect your EMI amount. The higher the rates, the higher will be your repayment amount.
So, if you choose a lower rate, your EMI amount will be lower and vice versa. So how to know the best interest rates for you? Let’s understand with an example.
Suppose an individual wants to opt for a 5-year personal loan of INR 8 lakh. But he is confused between two lenders who are providing different interest rates of 15.30% and 18.99% per annum.
To clear out the confusion, it would be better to calculate the EMI amount with the help of Personal Loan EMI Calculator.
When we are considering the rate of 15.30% per annum, the EMI amount would be INR 19,158 while the interest outgo will be INR 3,49,489.
On the other hand, if he chooses to opt for an interest rate of 18.99% per annum, the EMI amount and interest outgo would be INR 20,748 and INR 4,44,882 respectively.
From the results, you can clearly see the difference between EMI amount as well as interest amount. When you are choosing a lower rate, the EMI amount would be lower. This is why it is important to use the Personal Loan EMI Calculator before going for any kind of Personal loan.