The credit landscape in India has evolved over the years, with the increasing demand for small-ticket loans, easy access to funds, etc. Especially after going through the recent healthcare crisis, Indian citizens are inevitably opting for unsecured credit facilities to deal with a cash crunch. According to reports, personal loans recorded 13.5% growth in March 2021.
However, financial institutions are also facing many challenges due to the rising number of defaults in the personal loan segment. Financial institutions have reported that 6-8% of borrowers are missing their payment schedules, which has reduced the collection efficiency from 115% to 95% in April 2021. To avoid this, it is ideal to use tools like a personal loan interest calculator and plan your finances accordingly.
How to use a personal loan interest calculator?
Here is the entire process to calculate your monthly installments online using this tool:
Step 1: Visit the official website of your preferred lender, and choose the EMI calculator option from there.
Step 2: Enter the loan amount and the repayment tenor, including the interest rate offered by them.
Step 3: Click on ‘Calculate’ to get accurate results.
With these few steps, you can get an estimation of your EMIs that you will have to pay each month and stay prepared for your financial obligations.
Advantages of personal loan interest calculator
Since its ‘no end-use restriction’ feature allows to utilize the funds to meet any kind of financial requirements, borrowers often end up obtaining more than they actually need. Calculating EMIs before getting into such long-term commitments should be the first step of your financial planning. In order to avoid falling into a debt trap, use the EMI calculator to plan your strategies.
Here is a list of benefits you can get from these financial tools:
Calculating EMIs beforehand is necessary to avoid paying excessive EMIs and manage your finances better. However, while availing of these emergency loans, you need to make sure that the calculation is accurate so that your repayment strategy does not get hampered. the formula used to calculate EMIs is: #
MI= P × r × (1 + r)n/((1 + r)n – 1)
Here, P denotes principal amount, n signifies your chosen repayment tenor, and r stands for the rate of interest.
In order to avoid erroneous results, consider using these financial tools to evaluate your estimated monthly installments and plan your personal loan EMI repayment better.
- Comparing interest rates
The interest rate varies from one lender to another, depending on your creditworthiness, repayment track record, etc. As a matter of fact, a CIBIL score is extremely important for personal lending. Having a credit score of 750 and above is ideal in order to get instant approval as well. Therefore, work on factors that generally affect the credit profile and increase your chance of getting personal loans at a moderate interest rate.
Note that interest rates also depend on the combination of your chosen repayment tenor and loan amount, so choose the same wisely to avoid paying excessive EMIs. You can use a personal loan interest calculator to compare different combinations and then choose one as per your repayment capacity.
- Faster processing
With such financial tools, you need to just enter a few necessary inputs to get the exact monthly installment amount. The availability of these tools on most accounting websites ensures faster processing which further helps you to take a call while choosing the loan amount.
These days, lenders like Bajaj Finserv are also providing pre-approved loan offers on financial products like personal loans, business loans, credit cards, etc. The application process can become much more streamlined with these offers. To check your pre-approved offer, all you have to do is submit your name and contact details.
Now that you are aware of all the benefits an EMI calculator comes with, find the following details on how to make use of this online tool before applying for a personal loan.
Additionally, you can also use the personal loan interest calculator when you decide to pay a significant portion of the loan or close it altogether before your repayment tenor ends. This further helps you to evaluate the total amount you will get to save.