Importance of Using an EMI Calculator Before Taking a Personal Loan

Taking a Personal Loan is a smart way to meet your financial requirements, be it a wedding, travel or unexpected expenses. However, to ensure a smooth borrowing experience, you must understand how EMI on your Personal Loan is calculated. Knowing your loan EMIs can help you make a well-informed, responsible borrowing decision. In this blog, we’ll discuss the importance of using an EMI calculator before committing to a Personal Loan. Let’s dive in!

What is a Personal Loan EMI Calculator?
 

A Personal Loan EMI calculator is an online tool that helps you plan your estimate monthly loan repayments based on three primary inputs: loan amount, tenure (loan duration), and interest rate. It provides you with a quick and accurate picture of your monthly repayments, including both the principal and the interest.

Benefits of Using a Personal Loan EMI Calculator

1. Better Financial Planning
Knowing your EMI in advance helps you plan your monthly budget efficiently. You can assess whether the EMI fits comfortably within your monthly income and expenses.

2. Comparison of Loan Offers
With an EMI calculator, you can easily compare different loan offers from various lenders. Even a slight difference in interest rates or loan tenures can significantly impact your EMI, and this tool helps you identify those effects clearly.

3. Saves Time and Reduces Errors
Manual calculations can be time-consuming and are prone to errors. An EMI calculator provides accurate results instantly, saving you valuable time and ensuring you base your decision on correct information.
4. Helps Choose the Right Loan Tenure
If your EMI turns out to be too high, you can adjust the loan tenure to a longer period, which lowers your monthly burden. The calculator allows you to try multiple scenarios until you find the balance between affordable EMIs and minimum interest rate.

Steps to Use an EMI Calculator

Different lenders have different EMI calculator applications. But with Poonawalla Fincorp you can check your loan EMIs in just a few steps. Here’s a step-by-step guide:

1. Enter the Loan Amount
Enter the total amount you wish to borrow. This could range from ₹1Lakh to ₹50 Lakhs, depending on your needs.
2. Select the Interest Rate
Enter the applicable annual interest rate. You can input different rates to see how your EMI changes.
3. Choose the Loan Tenure
Select a duration over which you plan to repay the loan. This is usually measured in months, and Poonawalla Fincorp offers a loan tenure from 12 to 84 months. 

Once you enter all these details, the calculator will instantly show your EMI, total interest payable, and the total repayment amount.

Common Mistakes to Avoid When Calculating EMI

EMI calculators are simple to use, but overlooking certain details can lead to incorrect loan assessments. Here are the common mistakes you must avoid:

1. Ignoring Processing Fees and Other Charges
Some lenders charge processing fees, prepayment charges, and other hidden costs. These are not reflected in EMI calculators unless you factor them in manually. Always check the full cost of borrowing before making a borrowing decision.
2. Entering Incorrect Interest Rates
Using the wrong interest rate can impact on your EMI calculation. Make sure you use the correct rate offered by the lender.
3. Not Considering Floating Interest Rates
If you opt for a floating rate loan, your EMI might change with market fluctuations. An EMI calculator assumes a fixed rate, so prepare for variations if your loan isn’t at a fixed rate.
4. Overlooking Income Fluctuations
Sometimes we calculate EMI based on our current income without considering possible changes in the future. It’s wise to leave some financial cushion for emergencies or income variations.

To Conclude

Taking a Personal Loan can be a smart move if done with careful planning. An EMI calculator acts as a guiding tool that enables you to understand your repayment clearly before you borrow funds. It empowers you to make better financial choices, compare offers, and avoid overstretching your budget. In a world where financial mistakes can have long-term consequences, using an EMI calculator is not just good practice, it’s an essential one. With Poonawalla Fincorp’s online EMI calculator, you can calculate your EMI repayments just by entering your loan amount, interest rate and repayment tenure. Remember a well-informed borrower is a smart borrower. 

Frequently Asked Questions

1.    What is a Personal Loan EMI calculator?

A Personal Loan EMI calculator is an online tool that helps you calculate your estimate of monthly loan repayments by entering all the details such as loan amount, interest rate, and tenure. 

2.    Can I adjust the loan tenure using the calculator?

Yes, you can experiment with different tenures to see how it affects your EMI amount. 

3.    What is the highest Personal Loan amount I avail of with Poonawalla Fincorp?

The highest loan amount offered by Poonawalla Fincorp for a Personal Loan is ₹50 Lakhs.