Whether for medical emergencies, debt consolidation or higher education, personal loans help you cover multiple types of financial shortcomings. Also, due to its collateral-free availability, individuals can receive the credit without any hassle of property valuation. Thus, it can be considered a funding option readily available for eligible individuals.
Moreover, a substantial amount of up to Rs.25 lakh is available as a personal loan with attractive benefits and favourable terms from the best lenders. Nonetheless, it also comes with a fixed repayment liability like any other advance, and so extensive financial evaluation is necessary before applying. A personal loan calculator is a tool that can help borrowers with their financial planning before availing the advance.
Top benefits of loan calculators for financial planning
- A faster calculation of accurate results
Even though applicants can calculate their loan EMIs manually, it may result in errors. However, with the use of a personal loan calculator, individuals can not only calculate accurate results but also do so quickly.
Furthermore, its use is easy to understand, and borrowers can utilise this tool multiple times without any cost. They only require entering their preferable personal loan amount, rate of interest, and repayment tenure to calculate monthly instalments. With such calculation, individuals can schedule their repayment and plan for timely EMI payment even before applying for the loan.
- It provides insights into the loan’s amortisation schedule
When borrowers pay EMIs, the amount is assigned towards the payment of two different loan components – the principal and interest. Gaining an insight into these components for each EMI can help users make financially feasible repayment decisions like foreclosure.
Usually, during the initial phase of the loan tenure, lenders direct the larger part of the EMIs towards interest components to cover their financial risk.
However, a significant part of instalments is assigned to the principal constituent in the later phase. Individuals can view this amortisation schedule in detail while using an EMI calculator. Hence, the use of a personal loan calculator can be beneficial to make informed financial decisions.
- A visual reminder of the due amount
After availing a loan, repayments should be the top-most financial priority of borrowers until the closing of the account. Thus, periodic monitoring of these payouts can be useful to make other crucial decisions. Using a loan calculator thus enables borrowers to understand the amount of EMIs, the entire interest due, and the total principal due better.
Personal loan calculators from select lenders provide all these data with visual effects like a pie chart or table. So, it becomes convenient for the borrowers to gather information about their credit situation and manage their finance accordingly.
- It helps to select a suitable principal and repayment tenure
As said earlier, individuals need to put the values for tenures, interest rate, and principal amount. They can use a personal loan calculator to compute and compare different EMI amounts by altering the values so entered to check their repayment suitability.
For example, if the instalment amount calculated exceeds a user’s repayment capacity, they can either increase the tenure or decrease the principal amount. Or else, they can change both of these variables to find out a more feasible option.
Nonetheless, individuals should remember that an extended tenure may keep the EMI amount affordable, but it also accumulates higher interest in the long run. Contrarily, a shorter repayment tenure may increase the monthly instalment amount but helps save the overall cost with lower interest rates on personal loans. Thus, users can adjust the values to finally arrive at the most suitable EMI option based on their repayment capacity.
- It assists in selecting the right lender
Making the right choice of the lender can help individuals save a significant amount over the entire loan timeline. In India, various financiers offer different terms and features on their credit facilities. So, applicants can initiate extensive research and comparison via these calculators before moving on with the process of how to apply for a personal loan. They can make such decision based on the result comparison that includes EMIs, total interest payable and total loan liability
Also, they can consider lenders such as Bajaj Finserv that come with pre-approved offers to ease out the application process. These offers are applicable to several financial products, such as business loans and personal loans. Individuals can check their pre-approved offer by providing their personal details only.
Lastly, individuals must understand that even a slight difference in interest rates can impose a significant impact on total loan liability. Therefore, borrowers must use these calculators to get the most out of their personal lending at favourable terms.