How Planning a Personal Loan Can Prove Beneficial
Personal loans are small loans which can be availed from any financial institution. Personal loans fall into the category of unsecured loans due to which the applicants do not have to offer any collateral to the lender. Due to the lack of security interim, the lender refers to the credit score of the applicant for the credibility.
Benefits of Personal Loans:
Documentation: Filling loan applications can be tiring as you need to submit various documents and have to fill numerous forms to apply for a personal loan. These unsecured loans have minimal documentation process and get approved faster.
Quick Disbursal: Personal loans are known for their quick disbursal, and they can usually take up to 72 hours to get deposited in the bank account of the applicant.
Loan Amount: Since personal loans are small loans, banks offer up to INR 15 lakhs for personal loans. On the other hand, there are some NBFCs that provide loan amounts up to INR 25 Lakhs.
A loan is made up of factors like principal amount, interest rate, tenor and EMI. The principal amount and the tenor can be pre-decided while the interest rate charged by the lender is introduced at the time of loan application. All these factors play a vital role in the repayment of the loan, while the most important factor among them is the EMI of the loan.
What is an EMI?
Equated Monthly Instalment (EMI), is a form of monthly payments which is given to the lender for the repayment of a loan. The EMI of a loan depends on the other factors like principal amount, the tenor of the loan and the interest rate. The EMI for a loan can vary according to the tenor duration applied on the loan.
How EMIs are Calculated:
A planned loan can make your life easier. Hence, it is important that you choose your EMI amount according to your financial conditions. There are two ways through which you can calculate the EMIs for a personal loan.
1. Manual EMI Calculators:
The EMI for a loan can be calculated by applying the following formula
E=PxR ((1+r)n)/(((1+r)n-1))
In the above mentioned,
E= Equated Monthly Instalments
P= Principal amount
R= The interest rate applied by the lender
N= The tenor for the repayment of the loan.
It is important to know that while doing a manual calculation, you can only change the principal amount and the tenor of the loan, the interest rate of the loan remains constant and unchangeable. For some people, the calculation of the EMI can be a tedious task due to the numbers, and the factors included. In such cases, you can take the help of an Online EMI calculator.
2. Online EMI Calculator:
Nowadays, there are online EMI calculators available on the websites of different lenders that provide an estimation of the loan amount according to the rate of interest they offer. An Online EMI calculator is a systematic calculation software which can give you the information about your monthly instalments for the repayment of the loan.
To get an estimated figure of the EMI amount that you will have to pay for the repayment of the loan, you need to fill in the following details like principal amount, the rate of interest and the tenor of the loan. The online EMI calculator is easy to use and require minimal human efforts for the EMI estimation.
The personal loan EMI calculator can be used for approximate reference, but you need to be careful and prepared for the charges and fees that will be levied for the loan procedure. Personal loans should be well planned before filing the application.
Category: Loans
