A personal loan can sometimes be a lifesaver in a financial crunch. However, it is crucial to plan out your finances before taking a personal loan. Impulsively taking one can lead to missed EMI payments, severely affecting your credit score. One way to avoid such impulsive decisions is to use a personal loan EMI calculator to help you plan your repayments smartly. With the help of such a calculator, you can not only plan an affordable loan repayment structure but also customise a loan offer.
Why Use an EMI Calculator?
However, you may think that such financial planning can be done even through a spreadsheet. So, why use an EMI calculator? A personal loan EMI calculator is a specialised calculator that is designed to calculate monthly instalments based on a custom loan amount and loan tenure. To do this using a spreadsheet, you would need to learn complex formulae and functions. An online EMI calculator is a hands-free, automated way to go about it.
Basics of a Personal Loan EMI Calculator
Besides, an online EMI calculator is not just any calculator. It is an interactive tool that allows you to set customised values for different parameters (or variables). These variables are the loan amount (i.e., the amount you are taking a loan for), the loan tenure (i.e., the duration for which you wish to repay the loan), and the interest rate (i.e., the rate of interest charged by the lending institution).
Using a personal loan EMI calculator effectively helps you avoid doing complex EMI calculations manually, making it an indispensable part of your EMI planning.
Why EMI Planning Is Crucial?
The lack of proper EMI planning is one of the main reasons for loan repayment defaults. Your personal loan EMI may seem affordable at a glance. However, when you add this figure to other monthly expenses, things may soon become unmanageable, leading to loan defaults. Since loan repayment defaults can weigh heavily on your credit score, it is crucial to have proper EMI planning before taking a personal loan.
With the help of a personal loan EMI calculator, you can avoid such loan repayment defaults and maintain a good credit score. This will help you get loans easily in the future because your credit history remains intact. Despite this, there are many more benefits to using an EMI calculator, such as the ability to plan your repayments smartly.
Key Benefits of Using a Personal Loan EMI Calculator
To successfully pay off your personal loan, it is always recommended to use an EMI calculator beforehand. So, here are the top five benefits of using an EMI calculator to plan your repayments smartly.
1. Customised Loan Structuring
One of the most underrated benefits of an EMI calculator is that you can use it to structure a loan based on your needs and capabilities. You can adjust the loan amount, loan tenure, and interest rates to get the most affordable EMI amount.
2. Improved Budget Management
Using a personal loan EMI calculator, you get to know the EMI amount for your personal loan beforehand. This allows you to manage your monthly budget accordingly, such that after taking the loan, you can meet the repayment obligations without fail.
3. Avoidance of Over-Borrowing
When you see that the resultant EMI amount is too much to bear each month, you can adjust the loan amount. By reducing the loan amount or increasing the loan tenure, you can arrive at an EMI amount that you can comfortably pay each month. This can also prevent over-borrowing.
4. Enhanced Financial Discipline
By using a personal loan EMI calculator regularly, you can increase your awareness of personal finance. This will also encourage you to be more disciplined in your monthly expenditures so that if needed, you can bear the monthly EMIs for a personal loan.
5. Transparency in Loan Comparison
When you receive several pre-approved loan offers from different lending institutions, making the right decision can become tricky. You can use an EMI calculator to check which offer has the most affordable EMIs and then make a decision accordingly.
The Takeaway
Hence, a personal loan EMI calculator is more than just a way to calculate your monthly EMIs. It can empower you to make the right financial decisions. It can also help you plan out your EMI payments smartly. Last but not least, it can instil financial discipline in the long run.