Personal Loan Calculations made Easy with an Online Loan Calculator

When you take a loan of any kind, it is important that you understand how it operates to be able to make smart choices with regards to the principal, tenor and interest rate. To ensure this, use a personal loan EMI calculator. It is a handy tool that helps you get clarity about various aspects of the loan and allows you to make informed decisions.

There are several things that you can learn when you use this loan calculator. Here is a look at what they are.

The Value of your EMIs

The online EMI calculator tells you the amount that you have to pay as EMIs, based on the principal, tenor and interest. This can help you decide whether the loan is affordable for you and indicates whether you need to make alterations to the three elements to arrive at a result that is pocket-friendly. For example, if you borrow a principal of Rs.5 lakh for a tenor of 12 months with an interest rate of 10%, then your EMI will be Rs.43,958. However, if you double the tenor, you will have to pay Rs.23,072.

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The Total Interest that you Owe

Before you apply for a loan, you may want to know about the total interest that you will have to pay over the course of the tenor. For the example above, the total interest that you have to pay amounts to Rs.27,497. You can also see the difference in this amount by changing the value of the interest rate. So, if you change the interest rate from 10% to 12%, the total interest you owe will rise to Rs.33,093. This way, you can enter the interest rates of different loans and see how your interest payment varies. This exercise will help you zero in on an affordable loan.

The Total Repayment Amount

The online interest calculator also provides you with the total amount that you will have to pay. This amount consists of both the total interest amount as well as the principal that you have borrowed. Continuing with the first example where you borrow Rs.5 lakh for 1 year at 10% interest rate, this amounts to Rs.5,27,497. If you find that this is well within your budget, you can enter a higher principal and see if it makes better sense to opt for it. For example, with all other parameters remaining the same, if you increase the principal to Rs.6 lakh, your total repayment amount will increase to Rs.6,32,993.

The Schedule of Repayment

The personal loan EMI calculator also helps you understand your schedule for repayment. For every year of the tenor, it mentions the EMI amount and outstanding principal for each of the 12 months. Moreover, it breaks down the EMI further. It shows you how much of each EMI comprises the principal, and how much goes towards the interest. In the initial months, you will find that the interest component is higher, and the principal component is lower. As the tenor progress, the interest component reduces and principal amount increases. Understanding this in detail gives you a better idea of how your EMIs are structured and allows you to plan part-prepayments too.

Since the EMI calculator gives you these four insights, it acts as an aid that can help you make the right decisions when it comes to taking a personal loan. When you base your decisions on facts from the EMI calculator’s results, you can avoid making mistakes that can hamper your finances.

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