Here’s How You Need To Use Personal Loan Calculator

Personal loans are a popular means of financing needs these days. Many financial institutions offer personal loans at attractive rates. This helps you fund goals like travel, wedding, or buying assets. With personal loans, you do not need to dip into your savings. But make sure to use a Loan calculator before taking a loan.

Why do you need a Personal Loan Calculator?

Imagine you want a personal loan of Rs.1.5 lakh at an interest of 12% per annum. The lender says that you need to pay an equated monthly instalment (EMI) of Rs.12,000. In such a situation, most people comply. But how do you know whether it is the right amount?

You could always use a paper and pen or an Excel sheet to calculate the interest. But this takes time. With a personal loan calculator, you can get the answer in less than 10 seconds flat!

How can you use a Personal Loan Calculator?

Every month, you pay a certain amount of money as EMI. The amount you pay depends on three factors:

1) Loan amount

2) Loan tenor

3) Interest rate

If you change any of the above three actors, the EMI you pay will change.

For example, imagine that you take a personal loan of Rs.1.5 lakh at the rate of 12% interest for 12 months. In this scenario, the EMI would be Rs.12,883.

Let us change the interest rate to 15%. For the same loan amount and tenor, the EMI would be Rs.13,087. Here, the EMI increases by around Rs.200.

Now, consider a personal loan of Rs.2 lakh at the rate of 12% for 12 months. You would need to pay an EMI of Rs.17,770.

So, you can see how your EMI changes with a change in the three fundamental factors. A personal loan calculator helps you do the permutation and combination. That way, you arrive at the right amount, tenor, and interest rate you can afford.

Online Personal Loan Calculators

If you go online, you can find many personal loan calculators on the Internet. Take Bajaj Finserv, one of the leading non-banking financial companies (NBFCs) in India. Their website has a free personal loan calculator. It is convenient and easy to use.

Eligibility calculations

With this calculator, you can do much more than EMI calculations. For example, you can also assess your eligibility.

The eligibility calculator indicates how much money you can avail as a loan. This amount depends on various factors such as:

1) Age

2) Monthly salary

3) The city you live in

4) Any outstanding loans

You key in all these details to know the amount you can expect as a loan. For instance, say you plan to use a personal loan to renovate your kitchen. You need a loan of Rs.3 lakh. But your eligibility is for only Rs.2 lakh.

Then, it might be a good idea to revise your expectations or seek the loan elsewhere. You can save a lot of time and energy. Nobody wants to go through the whole application process only to find out they are not eligible.

Or, you could find out that you are eligible for Rs.5 lakh. You can always use the money to upgrade your remodelling plans.

Conclusion

Different financial institutions offer personal loans at different interest rates. Do not give in to the confusion.