When availing unsecured advances like personal loans, one needs to be decently calculative as being collateral-free financing, these loans require close repayment monitoring. One of the prime reasons why such monitoring is crucial is because their repayment holds critical weightage on the creditworthiness of individuals. One of the best ways to assess your borrowing choices and the repayment values so payable is to use self-help tools that financial institutions provide. Two of the most commonly used tools are personal loan interest calculator and eligibility calculator.
Understanding how to use them and what are the benefits so derived can serve in the long run, helping you better decide how much to borrow based on the results obtained. To start with, let’s first understand what an interest or EMI calculator holds for an aspiring borrower.
What is a Personal Loan Interest Calculator?
A personal loan interest calculator is a self-help financial tool that allows a prospective borrower to assess the total interest payable as per the loan amount borrowed. The tool is primarily designed as an EMI calculator and is also known as a personal loan EMI calculator commonly. Accordingly, it helps with EMI estimation for the loan amount borrowed as per the tenure selected.
The calculator is provided for free use by several financial institutions, and hosted on their websites for access to all.
Uses of an EMI Calculator
The primary uses of a personal loan interest calculator include the following.
- EMI computation
- Total interest computation
- Total loan liability computation
Along with these results, the calculator is also used for estimation of loan principal and interest as a percentage of the total loan liability. Further, some sophisticated EMI calculators compute and display the amortisation schedule of the loan as well. The schedule provides a detailed break-up of principal-interest component for each EMI payable along with the loan outstanding after each completed year of the total tenure. This helps the borrower make important repayment decisions such as when to prepay the loan for maximum interest savings.
Such usage can be beneficial in the long run. Even when selecting the loan amount and tenure, one can assess if the values selected related to the personal loan fit suitably within one’s financial standing or not.
What is a Personal Loan Eligibility Calculator?
Similar to an EMI calculator, a personal loan eligibility calculator is a self-help financial tool as well that allows the user to assess how much he/she can borrow at maximum based on his/her financial standing. The calculator is an efficient tool that provides the result accurately and within no time. All you need to do is enter the necessary values as asked for in the calculator and it computes your maximum loan eligibility immediately.
Uses of an Eligibility Calculator
Using an eligibility calculator is simple and quick. You only need to enter the required personal and financial details to compute your maximum loan eligibility. The values you might be required to provide can vary from one calculator to another. However, some aspects required remain the same, and include the following.
- You age
- Monthly income
- Any existing liability
- Monthly expenditure
Based on these inputs, the calculator computes the maximum loan amount suitable for you as per your income and borrowing capacity.
While the use of an eligibility calculator is limited to computing maximum loan availability, it can have significant bearing on your finances as your borrowing decision can get impacted by it.
Along with using tools like personal loan interest calculator and eligibility calculator, you also need to make sure if your meet all of the eligibility criteria that your lender has set. Accordingly, you must arrange the necessary documents before applying for the loan to experience smooth processing of the advance.
Read More: How to Find the Best Personal Loan?