Oct 04 • 3 mins read
The Importance of Using an EMI Calculator Before Applying for a Personal Loan
With easy access to finance, people have embraced loans as an integral part of their lives to meet all kinds of expenses, planned and unplanned. While the personal loan is a blessing, it can play havoc in your life if you haven’t planned for it, right from applying to repaying. Getting a personal loan isn’t enough. You need to be prepared to take on the financial commitment that comes along with it. Therefore, before you apply for a personal loan it’s important to know if you will be able to afford the repayments and to work this out you can use a personal loan calculator.
Personal loan EMI calculator
It’s a smart move if you are willing to check your EMI amount using a personal loan EMI calculator before applying for a personal loan. The calculator will not only tell you what your monthly repayments will be, but it will also educate you on how much interest you will pay over the loan tenure.
The Math Behind Personal Loan EMI Calculator
To use the personal loan EMI calculator, you simply need to input these 3 factors:
- Personal loan amount
- Personal loan tenure
- Interest rate
After inputting the data, the calculator starts computing the EMI value based on the following formula:
The EMI Calculation Formula
EMI = [P x R x (1+R) ^N]/[(1+R) ^N-1],
P stands for the principal loan amount.
R is the interest rate per month.
N is the number of monthly instalments.
The Importance of Using a Personal Loan Calculator Before Applying for a Personal Loan
1. It is simple, convenient, instant and accurate
The online EMI calculator can do complex calculations in just a few seconds, which otherwise would have taken hours with a paper and pen, thus helping you make a quick decision about the personal loan. Since there is no human intervention, the calculations are 100% accurate.
2. It helps you plan your EMI payments to ensure a good credit score.
If you calculate your EMIs before applying for a personal loan, you are preparing yourself well in advance for your debt repayment, thus avoiding missing your EMIs, which leads to poor credit score.
3. It helps you to make modifications in your expenses to accommodate the EMIs.
By knowing what your repayment amount would be, you are in a better position to understand how your life and expenses need to be modified once the EMI kicks in.
4. It helps you to experiment with the figures to make an informed personal loan decision.
One of the striking features of an online personal loan EMI calculator is that it can be customized to your specific requirements. You may keep on experimenting with different numbers in the column (amount, loan term, the rate of interest) to get results configured to suit to income and tailored to your needs.
5. It’s DIY self-learning tool
Finance calculations deal with figures and formulas that are usually complex. A personal loan EMI calculator makes complicated calculations simple for you to understand. With just a few details you get to know your EMI amount and how much interest you will be paying every month throughout the tenure of the loan. The calculator will also work upon the break-up of EMIs – the interest amount and the principal component, which you would need to pay every month. You do not need to depend on a banker or a financial professional to explain the calculation for you. With just a click of a button, all the figures you need are all up on the screen for you to understand, analyze and plan.
Interested in a personal loan? Used the EMI calculator to know the EMI amount? Now, you are ready to apply for a personal loan. And MoneyTap is ready for you with its ready line of credit. Download the app today.