Taking a personal loan is a major financial decision that lets you access funds for any personal need urgently. Personal loans come at higher interest rates and are repaid in Equated Monthly Instalments (EMIs) over tenure of 1-5 years usually. Calculating the exact EMIs to be paid over the loan tenure is important to plan repayment. This is where a personal loan EMI calculator becomes very useful.
Helps Compare Loan Options
A personal loan EMI calculator allows you to calculate EMIs for different loan amounts, tenures and interest rates. Banks and NBFCs offer personal loans at varying interest rates and maximum tenures. By inputting these details, you can compare the EMIs and total interest outgo under different loan options. This helps pick the option best suited to your repayment capacity.
Lets You Decide Loan Tenure
The loan EMI calculator shows how increasing or decreasing the repayment tenure impacts the EMI amount. Longer tenure reduces EMI burden but increases total interest paid. Shorter tenure results in higher EMI but lower interest. You can arrive at the ideal tenure that does not strain your monthly budget while minimizing interest outgo.
Checks Affordability
The most important benefit of a personal loan EMI calculator is that it lets you check the affordability of the loan amount you wish to take. By entering the desired loan amount and tenure, you can see the exact EMI you will pay each month. You can gauge whether the EMI fits within your monthly income and expenses.
Factors in Processing Fee
When calculating the total loan outgo, you need to include the processing fee charged on disbursal. The EMI calculator allows inputting the processing fee so that you get the total repayment amount over the tenure including the fee. This gives a realistic estimate of the total payment.
Shows Amortization Schedule
The loan EMI calculator generates an amortization schedule that shows the breakup of principal and interest repayment in each EMI over the tenure. The interest portion is higher in initial EMIs and reduces gradually as the principal gets paid off. Seeing this schedule helps understand the changing interest burden.
Allows What-if Analysis
The EMI calculator is a useful tool to do ‘what-if’ analysis by changing the loan amount, tenure or interest rates. You can assess your repayment capacity if rate of interest rises in future. Also, you can check alternate options if the desired loan amount is not affordable. Doing this analysis helps mitigate future financial risks.
Simplifies Prepayment Planning
Many borrowers try to prepay their loans to reduce interest costs. The online EMI calculator shows how making additional lump sum payments impacts your overall interest savings and tenure reduction. This helps plan your prepayments more effectively to optimize interest cost savings.
Easily Accessible and User Friendly
Online personal loan EMI calculators offered by portals are free to use and very user friendly. You can access them anywhere and perform all kinds of loan EMI calculations quickly. This simplifies the loan decision making process for borrowers.
Available Offline Also
Many banks also offer EMI calculators on their websites or mobile apps to help prospective borrowers estimate the loan obligations. Portals like 5paisa.com also have downloadable EMI calculators such as personal loan as well as vehicle emi calculator that can be used offline without internet access. These make EMI calculations easily accessible.
Conclusion
A personal loan EMI calculator is a very useful tool for borrowers to make informed decisions on availing a loan. By comparing options and checking affordability, 5paisa helps you pick a loan tailored to your financial situation. Using online EMI calculators simplifies loan planning and management.
