Personal loans are popular because of their unsecured and easy-to-obtain nature. When faced with situations that require emergency funding, a personal loan can be the best option to turn to, as you can get a loan online, with some lenders approving and disbursing the amount within hours of application. This ease of accessibility combined with unrestricted spending freedom, make it one of the most sought-after loans.
However, in order to have a seamless borrowing experience, you should make use of an EMI calculator before applying for a personal loan online. This can give you invaluable insight into your finances, plan your personal loan repayment better and in some cases, even keep you from making a wrong decision. To help you understand this further, here are the 4 functions of a personal loan EMI calculator that prove it is an indispensable part of your borrowing procedure.
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Helps You Gauge a Loan’s Affordability
One of the main uses of an EMI calculator is to help you decide whether or not you can afford the loan. Based on the interest rate offered to you and the principal amount you wish to borrow, you can know the exact EMIs you’ll need to pay each month. The EMI calculator will also tell you how much overall interest you’ll pay, which helps you decide on the tenor and its feasibility.
Serves as a tool for comparison
One of the best ways to get a great loan offer is to compare different lenders using their interest rates and pick the one that saves you the most money at a given principal amount. While the key factor is the interest rate, you should also look out for lenient personal loan eligibility criteria and easy foreclosure options before selecting a loan.
Bajaj Finserv Personal Loan boasts of all these benefits in addition to the fact that it has no hidden costs. You can get up to Rs.25 lakh on a flexible tenor ranging from 12 to 60 months and you can easily foreclose your loan by paying a minimal fee. You can also get your personal loan online by applying through the Bajaj Finserv website.
Helps You Plan Your Repayment
Having all this information ready speeds up repayment planning for you. Once you know your EMIs, you can decide if you can pay this amount from your monthly income, keeping your other fixed expenses in view. Generally, your EMI always remains constant, unless you’ve opted for a loan on a flexible interest rate or asked the lender to restructure the loan by increasing the tenor or have decided to prepay the principal amount.
For example, if you’re offered a personal loan at 13% interest per annum, then on Rs.2 lakh principal amount for a 24-month tenor, you’ll pay Rs.9,508 monthly. This value, along with the total interest you would owe, can be easily computed using an EMI calculator. Using the EMI calculator, you can also adjust your tenor to find a more suitable monthly payment. However, longer tenors mean you’re paying interest on your principal for longer, which translates to a higher overall sum. So, the best way for you to ease repayment is to choose the shortest tenor possible without compromising on your everyday needs.
Gives You a Clear Picture to Calculate Debt to Income Ratio
Knowing your debt-to-income ratio is vital for handling your finances wisely. Financial advisors generally suggest allotting only up to 25% of your income to debt as a higher ratio is risky. Using the EMI calculator, you can know exactly how much you owe monthly and add that to your budget. If that number factors in more than 25% of your income, increase the tenor of your loan. In some cases, it can be better to pay a little more in interest costs rather than give up financial freedom.
Making use of the Bajaj Finserv personal loan EMI calculator to its fullest will ensure that you repay the most affordable personal loan EMIs. Affordability is of the utmost importance when it comes to taking loans, as defaulting on your payments can land you into a debt trap or decrease your credit score due to missed EMIs. Additionally, choose a lender that simplifies the entire process of borrowing to add to the overall experience. Bajaj Finserv is one such lender that offers personal loans within minutes. Check your pre-approved offer online to enjoy hassle-free approval on a deal that is tailor-made for you.