A loan offers help for any cash crunch, whether it is a medical emergency, funding wedding expenses, taking a dream vacation, or pursuing higher education, among many others. Banks and Non-Banking Financial Companies (NBFCs) offer numerous loan options to those seeking funds.
Borrowing a personal loan has many benefits. Lenders do not question the intent of taking such a loan and hence you may use the amount as per your needs. Besides, such loans are unsecured loans, thereby indicating that no collateral is needed as security against the loan.
Understanding Loan Calculator
While seeking a loan, it is imperative to identify the amount to borrow as well as the regular installments to be made towards repaying the loan. For this purpose, you may use a personal loan calculator.
For instance, Ms. Simran Das needed finance to fund her daughter’s wedding. She was unsure of the amount she could afford to borrow. Her friend advised her to use a loan calculator available on her lender’s website. By doing so, she was easily able to determine the amount she needed to borrow. She was also able to identify the EMI amount without any hassles. She was even able to view her outstanding balance, payable interest, and other loan-related aspects quite easily.
A loan calculator is a digitized tool that helps you determine the amount you need to pay towards your Equated Monthly Installments (EMIs). For the purpose of calculation, you are required to enter details of the loan, namely your principal amount, the rate of interest, and the loan tenure. You may adjust these parameters to get the EMI amount based on your financial position. For example, you may increase the loan tenure to decrease the EMI amount and vice versa.
Using a Loan Calculator for Financial Planning
Just like Ms. Simran Das, you too may use a loan calculator to plan your repayment schedule in a smooth manner. There are numerous advantages of using a loan calculator. Following are three major benefits of doing so.
1. Aids in Budgeting your Repayment
Upon entering details of your principal amount, loan tenure, and rate of interest into the calculator, the tool displays the EMI amount. If the amount is too high, you may adjust the tenure accordingly to decrease your monthly repayment amount. Besides, you may also adjust the principal amount in order to avoid any strain on your finances. Borrowing more than you are able to afford will exert financial pressure. Loan calculators thereby help in identifying the right amount to be borrowed.
2. Helps you Select the Most Competitive Interest Rate
Loan calculators aid in identifying the total interest payable over the period of the loan. You may enter a higher or a lower interest rate and view the impact it has on the repayment amount. By selecting the most competitive interest rate, you may, in turn, reduce your EMI amount.
3. Identifies the Total Cost of the Loan
Personal loan calculators help identify the total cost of borrowing. This not only includes the rate of interest but also other fees such as processing charges, cancellation charges, legal charges, and part-payment charges, besides others. It provides a clearer picture of the total cost associated with borrowing the loan.
Keep the aforementioned benefits in mind and use a calculator for easy loan planning. By doing so, you may manage your loan repayments quite easily and make sound financial decisions.