The increased proneness towards personal loans can be attributed to the versatility and no-collateral requirement of the credit option. As a result, this financial choice helps one meet varied financial needs.
However, in order to make the most of the borrowing, borrowers need to chalk out a repayment structure and compute the EMI amount beforehand. In this regard, they can use the personal loan interest rate calculator. It will help them get an overview of the quantitative aspect of the credit option and make an apprised financial decision.
How to use a personal loan interest calculator?
It is extremely convenient to use a personal loan interest rate calculator. Here are the steps that will help you instantly compute EMI on the borrowed loan amount.
Step 1: Go to the official website of the preferred lender and select a personal loan from the different credit options.
Step 2: Now click on the personal loan interest calculator.
Step 3: Enter the desired loan amount. One can also use the slider to set the amount.
Step 4: Then mention the loan tenure and the interest rate the financial institution has charged.
On putting the three variables, this online calculator will instantly display the EMI amount, total interest, and overall payable amount.
Borrowers can then change the inputs and recalculate the variables. With this financial tool, it has become easy for debtors to try out different permutations and combinations of the loan amount, tenure, and interest rate and choose the right option for them.
The mathematical formula depending on which the personal loan EMI, interest, and the total payable amount is calculated is –
- EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
Here, P is the principal amount, R is the interest rate, and N is the loan tenure.
Advantages of using a personal loan interest rate calculator
Here are the highlighting benefits of using a personal loan interest calculator for your financial decisions –
- Fast and error-free results: Manual calculations are susceptible to mistakes. However, as personal loan calculators run on a mathematical algorithm, there is no chance of getting any wrong results. Also, manual calculations are time-consuming and using these online devices will deliver the results in a second.
- Easily accessible: Another notable benefit of a personal loan interest rate calculator is that borrowers can easily access it on the aggregator or lender’s website. This tool can be used infinite times and requires no charges to access it. In addition, they do not have to share any personal details.
- Financial planning: Borrowers can conveniently balance and pre-plan the cash flow using the personal loan interest rate calculator. It will help them avoid a financial crunch and repay the borrowed amount within the pre-defined time. Prior computation will help borrowers understand whether it is feasible for them to pay the EMI amount besides managing other financial liabilities and opt for a loan offer that suits them.
Besides using an online interest calculator, borrowers can also use a personal loan eligibility calculator. Upon mentioning different parameters like income status, credit ratings, etc., borrowers will know whether they qualify for the loan amount or not. Also, borrowers need to maintain a good credit score for personal loans above 700.
Conclusion
The personal loan EMI calculator clearly shows the total interest borrowers have to repay. As interest rate determines the overall cost of borrowing, borrowers can compare different options using this financial tool and choose the competitive option suiting their financial interests.