A personal loan is a very useful financial product in times of rising prices. You can use a personal loan for meeting your various financial needs. This includes paying for your child’s school fees or even for going out on a family vacation. But before you think of approaching a financial institution for a personal loan, it is very important that you make use of an online EMI calculator.
EMI calculator
An EMI calculator makes the loan application process a lot simpler for you. All you need to do is enter the following details:
- The amount you want to borrow
- The loan duration
- The interest rates applicable on the loan
- The processing fees
That’s it. The calculator processes these numbers and gives you the amount you have to pay as EMI each month.
The best part about the EMI calculator is its simplicity.
If you feel that the EMI is too high, you could always change the numbers until you come up with a value that is well within your budget.
If you were to do these calculations manually, the basic formula is as follows:
EMI = P*r*(1+r)n/(1+r)(n-1)
Here,
P = Total amount you wish to borrow
r = rate of interest per annum
n = number of instalments
You could do these calculations by hand, but it could take up a lot of your time and energy. Luckily, an online EMI calculator does all the hard work for you. For instance, with the Bajaj Finserv EMI calculator, you can pick a suitable personal loan that stays within your budget and meets all your requirements. Besides, it is very easy to use and offers results at a really fast speed.
Importance of an EMI calculator
Using an EMI calculator before taking a loan is like checking your wallet before you go out shopping. You want to make sure that you can afford to make the monthly payments on time. However, there are a lot of other important uses of an EMI calculator.
- The EMI break-up
The amount of money you pay back each month through EMIs is fixed. However, the amount you pay towards the principal and interest is always changing. In the initial period, the interest component of the loan is much higher. But over the course of the loan payment, the interest component reduces until the entire loan has been repaid.
An EMI calculator can give you the exact break-up of the money that would be repaid as the principal and the interest for each and every month.
Also Read: Loan Planning Made Easy With an EMI Calculator
- Incorporate changes in the loan
In most cases, the EMI you pay is a fixed amount. However, there are times when the amount can change over the loan tenure. For example, if you prepay the loan amount, the principal amount would decrease. This would change the amount of interest you have to pay too. As a result, the EMI would come down automatically.
Similarly, a change in interest rate or a restructure of the loan could impact your EMI payments. An EMI calculator can help you stay on top of these calculations very easily.
- Loan eligibility
Some EMI calculators also show you your loan eligibility. In other words, they help you identify which loans you are eligible for among those offered by different financial institutions. This depends on factors such as your net monthly income, existing EMI payments and loan tenure.
Bottom line
There are a lot of EMI calculators available online. Some are very basic while some offer more detailed information. The Bajaj Finserv personal loan calculator falls in the latter category. So, click <here> to know your what your EMI is before you apply for a personal loan.