Importance of Calculating Personal Loan EMI Beforehand
A personal loan is an unsecured loan, often considered as the best fit for coping with urgent cash strapped situations. This type of loan can be repaid over a due course of time, wherein the loan amount is distributed into EMIs as per your repayment convenience. Personal loans have gained immense popularity among loan seekers because these are offered without any collateral or security. Moreover, banks also offer competitive interest rates on personal loans, which usually start from as low as 10% for a period of 12 to 60 months. So, be it your wedding, higher education or medical needs, a personal loan has always got your back. However, it is important to remember your personal loan EMI before opting for one. To make sure you don’t default on EMI payments, you must access a personal loan EMI calculator to understand your EMI figures clearly and thereafter plan your finances accordingly.
If you are a salaried or self-employed individual between the age of 21 and 65 years with a good credit score and steady income, you are eligible for a personal loan. If your credit score is above 750, the chances of your personal loan are higher. Understanding your financial position is imperative before applying for a personal loan. Say you have a bad credit score – in that case, your personal loan application stands a chance to get rejected at the very first go. However, if you have maintained a healthy credit score, your personal loan shall be approved easily, followed by which you can check your personal loan eligibility and EMI figures on a personal loan EMI calculator.
Let us now look at the three most important things to do before applying for a personal loan.
- Compare the personal loan interest rates offered by various banks and choose the one with the lowest interest rate
- Check your personal loan eligibility
- Check your personal loan EMI figures on a personal loan EMI calculator
Checking your personal loan EMI figures is crucial to plan your finances well in advance. The EMI on your personal loan can be easily calculated using the following formula:
E = P x r x (1+r)^n/((1+r)^n – 1), where E is the Equated Monthly Instalment, P is the principal loan amount, r is the rate of interest, and n is the loan tenure.
However, manual EMI calculation is often time consuming and prone to errors. So, to make your work simpler, a personal loan EMI calculator comes to your rescue! These EMI calculators are available for free and you can simply fill in the details related to the principal loan amount and tenure in here to understand your personal loan EMI numbers at the first instance!
A prior EMI calculation shall help you get an idea of your monthly costs. You shall then be able to create a well-sought budget to maintain your day to day expenses, and manage your cash flow seamlessly. It also helps you in choosing the right loan tenure. Needless to say, personal loan EMI calculators are supremely beneficial for you if you plan to manage your finances diligently, despite being under a short to long term debt.