The introduction of dedicated financial tools has been pivotal in easing the borrowing decisions of individuals across credit segments. These tools come customized to the user’s need, carry a simple and intuitive interface, and are easy to use as well, needing only a few simple entries for computation. When it comes to personal loans, dedicated financial tools such as interest calculators have been helpful in ascertaining that a prospective borrower makes smart financial decisions based on various related aspects.
Also known as EMI calculators, these tools are multi-functional and need simple borrowing decision-based entries for the necessary calculation. Take a look at some of the top benefits that online personal loan interest or EMI calculator extend.
Top advantages of using personal loan interest calculators
- Intuitive and user-friendly
Designed for basic use along with quick and convenient computation, a personal loan EMI calculator comes with a user-friendly interface, requiring only three entries. With value adjustment scales, it is also intuitive in design, whereby a simple scroll across the scale allows you to make necessary entries. This makes it possible even for a layman to use this tool as he/she can even bypass numeric entries and just scroll through the scale.
The entries required in the calculator include –
- Principal or the loan amount you seek to avail
- Tenor or the total repayment term in months (for instance, 24 months for a 2-year tenor)
- Interest rate applicable as per the lender selected
Once entered, you will be able to see the results on the screen and decide on your borrowing amount and tenor accordingly.
- High accuracy
The interest calculator is also distinctly accurate, which ensures zero errors with the exact results based on your loan details entered. It thus does away with any errors that might occur during manual calculation. You can also let go of the lengthy computations done manually and save yourself from unnecessary hassles during the loan application.
The personal loan calculator works based on a pre-set formula-fed into it, given as follows.
EMI = P x r x (1+r) ^n/[(1+r) ^(n-1)]
Herein, P denotes the principal or the loan amount you seek to avail, r refers to the rate of interest levied by your lender, and n is the tenor converted into the number of months.
Once the value has been entered, the calculator will reflect the results, which primarily include –
- The EMIs payable throughout the tenor
- The total loan liability payable until the tenor’s end
- Total interest accrued on the loan amount
Along with these, the calculator also reflects the principal and interest values in a pie chart indicating the interest payable as a percentage of the total liability as against the principal. This indication can be significantly helpful in making comparisons among lenders for the best loan option selection.
Along with these results, the calculator also displays a detailed repayment schedule, which includes a year-wise break-up of principal plus interest for the EMIs paid, the total payment made, balance loan liability, and percentage of repayment made. These details can prove crucial to your overall borrowing decision. Proper repayment planning can help you get instant finance for all kinds of crises.
- Immediate results
When initiating the process to calculate loan EMI, interest, or any other result with the financial tool, you can expect results instantly after completing the entries. It thus facilitates fast decision-making without any delay. If you are in need of urgent funding, the loan calculator can come in handy.
Financial institutions providing online personal loans, like Bajaj Finserv, offer EMI calculators for free to simplify users’ borrowing decisions.
Application processing for such online personal loans has also been simplified by the lender with pre-approved offers, which also cut down the time involved. Alongside personal loans, these offers are available on several other financial products, such as business loans and credit cards. You can check your pre-approved offer with your name and contact details.
- Informed financial decisions for improved loan management
When using the tool, prospective borrowers can also compare various lenders to arrive at the lowest interest rate personal loans. The results so obtained also help make critical financial decisions related to loan repayments.
For instance, if you plan to prepay your personal loan, the repayment schedule can help identify the right time to optimize the interest-saving benefits. The repayment schedule is determined based on the amortization rules of the lender, wherein the interest and principal components of each EMI differ.
The lender does so to minimize the risk associated with delayed or non-repayment by recovering a higher interest initially, while the principal repayment increases only as of the tenor’s end near. This should help you time your prepayment correctly so that you do not end up paying a higher interest amount.
- Allows loan customization as per affordability
You can alter the values entered into the interest calculator and compare the outputs thereto for affordability. Specifically, you need to check whether the EMIs and interest payable computed fetch immediate as well as long-term affordability or not. Accordingly, you can change the values to obtain the right result. Here, you need to take care of a few things.
- An increase in the loan amount also increases the EMIs payable as well as the interest accrued on your loan and vice versa.
- A change in tenor inversely impacts the EMIs while its effect on the interest accrued is direct.
Accordingly, you can make changes to the tenor and loan amount values to strike the right balance between EMI and interest affordability and plan your personal loan EMI repayment better.
These factors highlight the top advantages of an interest calculator that users can benefit from. Along with calculating your personal loan EMI, you can also use the tool to compare different lenders available in the market before finalizing the best one. Other tools that can help make suitable borrowing and financial decisions include a personal loan eligibility calculator, foreclosure calculator, part-prepayment calculator, and the likes.