Interest calculators are a way of easily determining personal loan EMIs. They have a common usage, which is to estimate the borrowing cost and monthly instalments of a personal loan. Financial institutions, including NBFCs in India, have been incorporating technological advancements to ensure optimum borrowing experience. This online tool is one such innovation that helps borrowers plan their repayment better.
This online tool, to a great extent, mitigates the risk of delinquency among borrowers. A Times of India report from December 2020 stated that the delinquency rate in the personal loan sector was much lower than that of other segments.
Therefore, intending borrowers should know how to use this interest calculator to get accurate results.
A stepwise guide to use a personal loan interest calculator
Following are the steps to use a personal loan interest calculator:
Step 1: Decide the loan amount and visit the website of your preferred lender.
Step 2: Enter the loan principal and choose a tenor convenient for you.
Step 3: Now, enter the interest rates offered to you.
On entering these details, you can view the monthly instalments, total interest payable and total amount payable (interest + principal), among others. Alongside, individuals can also access the amortisation schedule of their personal loans. It will help them to check the amount repaid and outstanding after every EMI payment.
A personal loan interest calculator works on the conventional mathematical formula and you can calculate personal loan EMIs using it.
EMI = P × r × (1 + r)n/((1 + r)n – 1)
Here, P= principal amount; r= interest rate and n= tenor in months.
While this is fundamental to any personal loan interest calculator, different financial institutions may offer calculators with varying configurations.
Suppose an individual availed of a personal loan of Rs.20 lakh for a tenor of 36 months with an interest rate of 14%. He/she will need to pay an EMI of Rs.68,355. The total interest would be Rs.4,60,789, and the total amount payable would be Rs.24,60,789.
It takes only a few seconds to get these results with this online calculator. Now that you know how to calculate personal loan EMIs, you should also know the advantages of using this online tool.
Advantages of using a personal loan interest calculator
Following are some of the most crucial benefits of using a personal loan interest calculator.
- Selecting right loan amount and tenor
If you want to find the right tenor that works for you, a personal loan interest calculator proves to be beneficial. It also lets you decide the loan amount. Since lenders decide personal loan interest rates, you can adjust the loan tenor and principal to arrive at a feasible EMI payable.
Remember that with a longer tenor, the interest outgo increases and vice-versa.
- Knowing repayment schedule
Planning the loan repayment beforehand allows individuals to manage their finances better. Hence, it is essential to know the EMI payable and other aspects of loan repayment with a personal loan interest calculator.
Besides amortisation schedule, selected lenders also provide a pie-chart showing the percentage of interest and principal going towards paying the loan. Thus, with this online tool, you can plan your personal loan EMI repayment better.
- Comparing interest rates
Personal loan interest rates vary with different lenders. Therefore, you should compare lenders to choose the best rates available. You can estimate the borrowing cost by entering different interest rates and settle for the best one. Alongside, you should also know how you can avail of better interest rates for your personal loan.
Selected financial institutions such as Bajaj Finserv also provide high-value online personal loans at competitive interest rates. They also offer Flexi personal loans that reduce the interest burden further. With this facility, you can withdraw funds as and when required. Additionally, you need to pay interest only on the funds utilised.
This NBFC also extends pre-approved offers that simplify and expedite loan availing process. Besides personal loans, such offers are also available on a range of financial products, including business loans, credit cards and many more. All you have to do is enter your name and contact number to check your pre-approved offer online.