While loans might seem like a strenuous responsibility, Personal Loans are there to cover an individual’s financial needs without much hassle. Since many types of loans are available, choosing the best Personal Loan in India might seem like a daunting task. However, knowing a few things before applying for a loan can help you choose the best Personal Loan option for yourself.
In India, you can get a Personal Loan to take care of different personal needs such as medical emergencies, weddings, travel, home renovations, higher education, loan consolidations, and so on. The biggest benefit of getting a Personal Loan is that you can convert it to monthly EMIs and pay them off easily. There is bound to be some confusion regarding how interest rates are applied and EMIs are calculated for Personal Loans. Because, contrary to the popular myth that Personal Loans have higher interest rates, with a Personal Loan interest calculator, you can check your probable EMIs easily.
Personal Loan EMIs are easy to calculate with the help of an online Personal Loan interest calculator. However, you can do it manually too by using a simple formula which is:
[P x R x (1+R)^N] / [(1+R)^N-1]
P= The principal amount
N= The tenure of the loan
R= The rate of interest
With this simple formula, you can calculate your EMIs before getting a Personal Loan within a matter of minutes.
Since online Personal Loan calculators are making life easier, you need to know the basic aspects of these loan calculators. Remember, these are more or less what you need for calculating your Personal Loan EMIs, either manually or automatically.
Here is a list of five things you will need to know to use a Personal Loan calculator.
#1 The amount of the loan
To calculate EMIs, you need to decide the amount of money you need. The total calculation will depend on the principal amount the borrower gets from the lender and interest rates will apply to this principal amount. The principal will depend on other factors such as age, documentation, employment type, the type of loan (secured/unsecured), and so on.
#2 The rate of interest
The rate of interest on the principal amount depends on the chosen lender. For example, Poonawalla Fincorp offers some of the best Personal Loans in India with very attractive interest rates. Knowing the interest rate is very important since the EMI calculation will depend on this interest rate. Also, this interest rate will depend on your financial behaviour in the past, reflected through your CIBIL or credit score. The interest rates vary depending on various factors such as age, employment type, type of loan, tenure, and credit score. Thus, it is crucial to check the applicable interest rate before calculating your loan EMIs.
#3 Tenure of the loan
The loan tenure is the time over which you’ll need to repay the entire loan amount. Although the EMIs offer flexibility, keep in mind that there will still be a fixed tenure in which you are required to repay the loan. Honouring these due dates is important since it is a part of your credit behaviour. Missing repayment deadlines can negatively impact your credit score, which is not a good sign. If you need any loan in the future, a bad credit score can cause trouble.
#4 Principal vs. Total Payable
Understanding the principal amount and the total amount you need to pay is very important. The principal amount is the amount you received from the lender, while the payable amount is the figure after adding the interest rates. The payable amount varies depending on the tenure and the rate of interest. Generally, longer terms offer lesser interest rates.
#5 Your credit score
Your CIBIL score or credit score is one of the main aspects of loan calculation you need to know. The principal and the interest will both depend on this. A good credit score of over 750 can help you access the best Personal Loans in India with low-interest rates as you’ll be considered a reliable customer just like Spectrum customer support.
Calculating the EMI for a Personal Loan is no longer an issue with a Personal Loan interest calculator. If you are considering a loan, knowing the basics is what you need!
