If you are thinking of opting for a personal loan, it is mandatory to calculate the EMI that you will have to pay for repaying the loan. You can quickly achieve this task using a personal loan EMI calculator. However, before that, you will need to estimate the interest on the loan amount, which you can do using an online interest calculator. A personal loan interest calculator offers several advantages that you can immensely benefit from.
4 Benefits of Using a Personal Loan Interest Calculator
Below are four ways in which you can benefit immensely from an interest calculator:
1) Aids in strategic budget planning
An online calculator gives you the proper estimate of the interest you will have to pay for a particular loan amount. This helps you to plan your monthly budget strategically so that you do not have to compromise much on your lifestyle. Additionally, you can pay your EMIs timely and maintain an excellent credit score.
2) Endless easy interest comparisons
You can navigate to the official website of a financial institution to know the interest rate at which they offer a loan. Then, using this value, you can estimate the interest you will have to pay to different financial institutions.
These online tools are free of cost; hence you can use them as often as you want. Additionally, these online calculators provide instant results. Therefore, you can save time as well as choose the right lender.
3) Helps to choose the repayment tenure
The loan repayment tenure immensely affects the interest rate. Hence, you can easily adjust your loan repayment tenure based on the interest rate. For example, if you want to get a loan at a lower interest rate, you can opt for a longer tenure and vice versa.
4) Hassle-free and accurate calculations
Using these online interest calculators is extremely easy. So you do not have to look for a separate user manual to use them. Additionally, the chances of making any significant errors while entering the values are almost negligible. Once you have entered the correct values, you can obtain accurate results.
How to Use an Online Interest Calculator
Below are the steps that you can follow to use an online interest calculator:
Step 1: Visit the official website of a financial institution.
Step 2: Move to the personal loan section of the financial institution.
Step 3: Open the personal loan interest calculator page.
Step 4: Enter the loan amount, interest rate and repayment tenure by adjusting the sliders.
As you adjust the pointers, you can get the results almost instantly. However, if you see that the interest rate is higher than expected, you can opt for several strategies that would significantly reduce them.
The best strategy to opt for a lower interest rate is opting for a longer tenure. Generally, financial institutions offer this because they are sure that an individual can comfortably repay the loan amount within the stipulated time. This benefits you as you can save more on your monthly instalments.
2) Maintaining a good credit score
A good credit score projects you as a responsible individual who can manage their finances well. In addition, since you do not need to pledge any collateral, financial institutions primarily rely on your credit score for loan approval. So, if you have a good credit score, there is a high chance that the financial institution will approve your request for a lower interest rate.
3) Selecting the right loan amount
There are many instances when individuals tend to opt for a loan amount significantly more than they need. They often do this to stay prepared if any more urgent fund requirements crop up.
However, you must understand that you will have to pay a higher interest for an increased loan amount. This would certainly mean a higher monthly instalment. So, to avoid this, opt for a loan amount that is sufficient to cover your current need for funds.
4) Choosing the most affordable offer
Before finalizing on the financial institution for a personal loan, make sure that you have compared the interest rates offered by different financial institutions. This would help you to avail the best offer and a lower interest rate.
You can use a personal loan calculator in a way similar to personal loan interest calculator. However, you must keep in mind that the values that you will need to enter are different. Using the calculator will help you know the EMIs you have to pay for your loan amount and tenure. It will help you plan your finances better.
