Personal loans are a commonly known phenomenon. This type of loan is put in place when the borrower needs a sum of the money for his private expenses. The expenses can be of a wide range. For instance, the need to fund their kid’s education or repay a debt. Personal loans are very flexible in general. However, customers are provided with a limited amount of time to return the lent funds. Thus before diving into this scheme, lenders let the borrowers check for an estimated EMI they may have to pay. This is by introducing an EMI calculator on the personal loan application or website for that matter. In technical terms, a borrower’s monthly payment or EMI depends on the loan’s tenure, interest rates & principal amount. Wanna dive into further details on how to calculate EMI for personal loan? We have got you covered with the facts mentioned below.
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Things to consider
Below are a few of the important factors that the client should keep in check before applying or considering a personal loan.
The credit score
The credit score is important because it shows a lot about the client. It shows that the person is eligible to repay the loan without a problem. It also showcases the financial discipline of the client, making him a reliable & trustworthy borrower. The credit score should be above 700.
The annual income & employment pattern
The lender looks at the nature of the employment as well as the money earned by the borrower. The nature of employment could be salaried or self-employed. Depending on the nature, the amount varies for different borrowers. The salaried employee should at least have experience of 6/12 months at his current job while the self-employed needs experience of 3 years. The annual income also affects this decision as the lender issues the loan with the knowledge, of how much is that client able to repay depending on his/her salary.
The term EMI stands for Equated Monthly Installments. EMI has allowed the common man to dream about the luxury he desires without having too much stress about the payment of the loan in one go. Personal Loan EMI calculator help ease these even more.
Benefits of an EMI Calculator
Now that we have studied what the EMI calculator is & how it functions let us have a look at its benefits given below.
Easy to use
The EMI calculator is very user friendly. It doesn’t require the consumer to know or understand anything. It simply requires the three important elements namely being Principal amount, Tenure and Interest rate.
No room for errors
When the consumers indulge in doing the calculations manually there are high chances that they may make an error. This is could lead to a waste of both money & time.
Using the personal loan EMI calculator helps the consumer with accurate data of what they can expect. Since it’s flexible, the consumer could change the inputs in the places of the Principal amount, Interest rates & Tenure to understand with what arrangement they are comfortable, considering.
Here’s hoping that the points mentioned above were helpful enough to make you understand better how to calculate EMI for personal loan online. Also, personal loan EMIs are mainly based on the interest rates charged by different banks and the tenures involved. Make sure to run a detailed comparison before finalising one.