A personal loan is the ideal source of funds to meet almost any financial needs that you may have. Unlike other popular loan products like car and home loans, personal loans don’t have collateral, and the lender doesn’t earmark the fund for any specific purpose. You may also line up a pre-approved personal loan with your preferred lender, which can be applied and received faster than usual.
While availing of a personal loan is convenient, you have to also make sure that you prioritize convenience in the repayment as well. Repayment of personal loans is made through EMIs, which are due monthly. You can select the optimal EMI amount by using a personal loan EMI calculator.
Always calculate the EMI before starting repayment
For a particular loan amount, the EMI is higher if the loan duration is shorter and vice versa, provided the personal loan interest rates are the same. But calculating the EMI for different loan tenures involves complex mathematics, which is,
E = P x r x (1+r)^n/((1+r)^n – 1)
Here, E is the EMI, P is the principal portion of the loan, r is the rate of interest, and n is the loan tenure.
But to simplify your effort, you can enter the relevant information on an online calculator and find out your personal loan EMI amount. Check the changes in the EMI for different loan tenures and select the one that best fits your budget.
Some of the reasons that make a prior calculation of EMI important
Monthly budget management:
When you calculate the EMI amount beforehand, you can study the impact of the new EMI liability on your monthly budget. You can analyze your monthly budget to find out what EMI amount would be convenient for you to repay.
Reduced chances of default:
You can select your ideal EMI liability through prior calculations, which reduces the chances of default from your end. You can avoid the inconvenience of default, and with consistent repayment, you can eventually improve your credit score.
A better understanding of liabilities:
Instead of deciding the personal loan EMI amount while finalizing the loan formalities, it is always better to study it beforehand. You have more time to understand the difference in the EMI amount at different interest rates and different loan tenures.
By calculating the EMI amount beforehand, you are not dependent on the lender to provide you the options. You are clear about the EMI amount for different loan tenures and personal loan interest rates. This helps you to decide on the personal loan terms faster.
Thanks to the easy-to-use personal loan EMI calculator, you can now find your preferred EMI amount without using a mathematical formula or the lender’s help. If you want to ensure that you are fully prepared to repay the loan consistently and within time, calculating the EMI beforehand is highly recommended.