A personal loan allows you to access funds for major expenses or financial goals. However, before availing one, it is prudent to estimate your repayment capacity.
An online EMI (Equated Monthly Instalment) calculator is an invaluable tool in this process. Inputting your loan amount, tenure, and interest rate instantly provides your monthly EMI breakdown. This empowers you to make informed borrowing decisions aligned with your budget.
Benefits of Using a Personal Loan EMI Calculator
Using a personal loan EMI calculator offers helpful advantages such as:
1. Estimates your EMI amount
An EMI calculator estimates the equated monthly instalment you’ll pay based on your input loan details. This allows you to determine affordability before applying.
2. Allows comparison of loan options
You can model multiple scenarios to identify the most suitable loan product by inputting different loan amounts, tenures, and interest rates into an EMI calculator. Comparing EMIs helps you pick an option that fits your budget.
3. Prepares for changes in interest rate
Even a slight variation in interest rate can impact your EMI. An EMI calculator lets you model best and worst-case scenarios to account for potential rate changes during the loan tenure.
Where to Find a Personal Loan EMI Calculator?
Most loan providers’ websites, like IDFC FIRST Bank, have an embedded EMI calculator tool you can access. Alternatively, third-party financial planning portals also offer free EMI calculators. These tools simplify planning, especially if you’re considering a personal loan for self employed.
How to use an EMI Calculator?
Using an EMI calculator is easy by following these key steps:
1. Input basic loan details
Start by entering the key details that impact your EMI – loan amount, tenure and interest rate.
- Loan Amount: The total funds you need to borrow. This could range from ₹50,000 to ₹10 lakh, depending on the lender’s policies.
- Tenure: Standard options are 1-5 years. A longer tenure reduces EMI outflow per month. Most calculators allow you to select a tenure between 12 and 60 months. For instance, IDFC FIRST Bank’s calculator supports flexible tenures for varied borrower needs.
- Interest Rate: Add the applicable interest rate. For example, personal loans often start at competitive rates like 10.99% per annum.
2. Account for processing fees
Some loan providers charge a one-time processing fee on disbursal. If applicable, add this to the loan amount for accurate calculation.
3. Input additional details
You may need to share a few additional details for a customised estimate:
- Repayment frequency: Monthly or EMIs paid yearly
- Loan start date: Impacts interest cost if not taking loan immediately
4. Check amortisation schedule
Most calculators provide an amortisation chart along with the EMI estimate. This schedule breaks up your repayments into how much goes towards principal and interest per EMI.
5. Model other scenarios
Once you have the initial estimate, experiment by changing tenure, loan amount, and interest inputs to compare the costs of other options; this will help you identify the optimal loan product.
6. Check prepayment options
See if the EMI tool also provides a prepayment estimate for part-prepaying of the loan to reduce interest costs. Else, use a prepayment calculator.
How do you Pick the Right Loan Based on EMI Calculator Outputs?
Here are some factors to consider from the EMI calculator outputs as you compare personal loan options:
- EMI fitting monthly budget: Assess if the EMI is within your monthly surplus income. Avoid loans where the EMI pressure feels too high.
- Total interest payable: Opt for the loan option that minimises your total outflow towards interest over the tenure.
- Amortisation schedule: Review how much repayments reduce loan principal each month. Faster principal reduction means you get debt-free sooner.
- Processing fees: Keep one-time fees on top of the principal low to prevent the loan from becoming excessively expensive.
- Prepayment flexibility: Check if you can easily part-prepay the loan without restrictions and charges. This allows you to repay faster if funds permit later.
Conclusion
A personal loan calculator gives you financial control. Use it to determine an affordable EMI, compare lender offerings, identify the cheapest option, and account for uncertainties.
Many loan providers also offer instant loan options for those seeking quick funding solutions, making financial planning seamless. Being EMI-prepared ensures you borrow sensibly without repayment stress, making your loan journey smooth and worry-free.
