A personal loan is among the most versatile credit instruments that you can use to cover all your financial requirements. From an unexpected home renovation to a luxury international trip, taking a personal loan is an excellent way to keep your savings safe and manage big-ticket expenses conveniently.
But as it is an unsecured loan, it usually comes with a higher interest rate. So how do you know if you can comfortably repay the borrowed amount? The answer is simple – by using a personal loan EMI calculator.
In this blog, we’ll look at what is a loan EMI calculator and why you must use it before applying for a personal loan.
What is a personal loan EMI calculator?
A personal loan eligibility calculator or EMI calculator is a free online tool that helps you calculate the potential EMIs on your personal loan. It enables you to determine the maximum loan amount you can borrow that you can afford to repay without straining your monthly budget.
The PL calculator considers three essential parameters to generate your loan EMI value – the principal amount, interest rate, and loan tenure.
To use the personal loan eligibility calculator, all you need to do is-
- Visit the EMI calculator page of your desired lender
- Enter the principal, interest, and tenure values
- Click on ‘Calculate’
The PL EMI calculator will calculate your potential EMIs in seconds. If the results exceed your repayment capacity, you can keep adjusting the parameters until you arrive at a more desired value.
Benefits of using a personal loan EMI calculator
Using a loan EMI calculator is fairly simple. If you’re planning to apply for a personal loan, this is a crucial step that you must take to make an informed decision. Why? Let’s find out.
1. Plan your monthly budget effectively
While a personal loan helps you meet big-ticket expenses conveniently, its repayment can take a toll on your monthly budget if managed poorly. Using a personal loan EMI calculator before you apply for a loan can help with this.
It helps you determine how much money you must set aside every month to repay the loan and plan your budget and finances accordingly. It also enables you to borrow only as much as you can repay comfortably.
2. Create a plan that works for you
A PL calculator allows you to experiment with different parameters and create a plan that works for you. For example, if you wish to repay the loan quickly, you can reduce the loan tenure to determine your EMI.
Similarly, if you want lower EMIs, you can reduce the principal amount or increase the loan tenure until you’re satisfied with the results. This way, you can customise a plan in minutes and make easy monthly repayments without any financial inconveniences. You can also use the calculator to compare the personal loan plans of different lenders.
3. Save time and generate accurate results
A PL EMI calculator isn’t the only way to calculate your potential EMIs. You can also calculate them manually using this formula- P x R x (1+R)^N / [(1+R)^N-1]. Here, P is the principal loan amount, R is the rate of interest, and N is the loan tenure.
However, not only is the manual method more complicated and time-consuming, but it is also prone to errors. Plus, adjusting and experimenting with different values will take you hours.
But with an online personal loan EMI calculator, you can generate accurate results instantly. What’s more? You can keep experimenting with as many combinations as you like without spending the entire day scribbling away on a notepad.
4. Simplified and transparent repayment plan
When you use a PL EMI calculator to calculate your potential EMIs, you get a clear understanding of your principal and interest payouts every month. Moreover, you also get an amortisation schedule that helps you plan your repayments throughout the loan tenure.
The schedule presents a breakup of the loan amount you must repay over the loan tenure. In addition, it displays the exact percentage of your EMI’s principal and interest components. A simplified and transparent repayment structure helps you prepare your finances in advance and prevent defaulting on payments.
Finance your hefty expenses with Tata Capital
If you’re looking for an unsecured, multi-purpose loan, then a personal loan is the right choice. But before you apply for one, you must do due research. This includes comparing interest rates, identifying potential EMIs with a PL calculator, and carefully reading all terms and conditions.
After determining your ideal personal loan plan, apply online with Tata Capital. We offer the best interest rates in the market and flexible repayment options, so your EMIs don’t disrupt your monthly budget.