Planning your finances right is very crucial, especially when it comes to availing loans and advances. While availing suitable funding to meet necessary expenses has become very easy, it in no way releases an individual from the need for detailed financial planning. You must plan your savings, investments and borrowings prudently to manage your finances well. Even if you plan to avail an instant personal loan through a loan app, it is very crucial to plan your repayment well.
A personal loan comes with zero restrictions to end-use, which allows the borrowers to avail and utilise it for a host of purposes. Whether you want to make a high-end purchase or plan a trip, get your home renovated or accommodate some other needs, a personal loan can come handy in fulfilling all your wishes. However, you should think twice before availing a loan to meet your wishes, it is rather an instrument that’s meant for your essential needs!
Another reason why it is crucial to plan your finances when availing a personal loan is because these are unsecured advances and may end up accruing significant interest if not planned well. Although instant loan apps provide low rates to make instant personal loans affordable, you still have to pay interest. And this interest depends on a lot of factors including the amount of your loan, the tenure of your loan, your credit profile and much more. So, with a loan you will have to pay more than what you borrow!
That’s why it is important to understand all aspects of an instant personal loan before availing one. You can use a personal loan calculator to understand the interest pay out, the EMI load and the tenure for which you will have to pay the EMI.
What is a Personal Loan Calculator and what are its types?
Personal loan calculators are dedicated financial tools that lending institutions provide to help borrowers make informed loan decisions. These calculating tools are available for free and can be easily accessed either through the lender’s website or through an instant loan app. You can assess various loan outcomes with these calculating tools, which are pretty accurate and quick, and make your borrowing decisions accordingly.
While there are several types of personal loan calculators available online, two prominent ones that help make your borrowing decision better include the following.
– Personal loan eligibility calculator
– Personal loan EMI calculator
Below given are the detailed guides as to how you can make your personal loan financial planning with these tools.
What is an Eligibility Calculator and how it helps plan your borrowing?
A personal loan eligibility calculator is a dedicated financial tool that helps an aspiring borrower check how much they can avail as loan at the maximum. Depending on various financial factors, every individual gets a borrowing limit. When availing a personal loan, it is ideal to apply for an amount within this limit as it improves the chances of loan approval and also helps manage the finances better.
An eligibility calculator helps estimate this limit for you based on a host of entries that you are required to make. These can vary from one calculator to another, but usually include your age, income, city of residence, and any previous credit availed.
Once entered, it immediately computes an amount of instant personal loan that you can suitably avail. This sets the maximum threshold for you within which you can make your borrowing planning.
The next assessment of personal loan affordably you can do with the help of an EMI calculator.
What is an EMI Calculator and how to use it to estimate affordability?
You can check if the EMI fits well into your monthly income without straining your finances. In case the EMI is high, you can reduce the loan amount or increase the tenure to bring the EMI value down within the affordable threshold. When changing the tenure value, it is also crucial to assess its impact on the total interest payable as an increase in the tenure increases your interest pay out, which in turn, increases your total loan liability.
A personal loan calculator helps you decide on how much you can avail as an instant personal loan and what tenure fits just right for its repayment. It also gives you a clear idea of the interest that you would be paying for a specific loan amount and tenure combination. Having this clarity about your loan EMI, your loan expense and your eligibility options helps you plan your personal loan in a smart way.