How to Plan Efficient Personal Loan Repayment with EMI Calculator?
If you need a loan for a personal purpose such as education, marriage, or starting a business, you can get one from a bank. Depending on your income and repaying ability, different banks offer different loan products to meet your borrowing needs. Ever wished you had a complete picture of your cash flow when it comes to repayment of loans? Not just when they are due but also how much EMI will be, and the time it will take to pay them back.
Luckily for you, there is a personal loan repayment calculator that will help you plan your repayment accordingly. This article lists some useful tips to help you manage your personal loan repayment in the easiest way possible, so read on!
What is a Personal Loan Repayment Calculator?
A personal loan repayment calculator also called an EMI calculator, is a tool that allows you to see exactly how much you will end up paying in EMIs over time. They show the total cost of your loan, the period it will take you to pay it off, and the amount you will be paying monthly. The personal repayment calculator is useful for a few scenarios, especially when you are trying to decide if you can afford a certain loan.
For example, if you have applied for a loan to buy a car, an EMI calculator can help you figure out how much you can comfortably repay over time. You can also use it to estimate how much interest you will be paying if you have a loan for longer. The same applies if you are looking to go for a shorter loan for a specific purpose.
How Does an EMI Calculator Work?
With a personal loan repayment calculator, you enter the loan amount, the yearly interest rate, the period required to repay the loan (the repayment period), and the monthly repayment amount. You would typically have to enter these three things manually when using a calculator to plan your loan repayments.
Once you’re done entering these details, the personal repayment calculator will work out the calculations within seconds. The repayment amount, the length of time it will take you to repay the loan, and the monthly repayment amount will then be displayed.
Benefits of Using a Personal Loan Repayment Calculator
The following are the benefits of using a personal loan repayment calculator:
1) You have a complete picture of how your loan will affect your cash flow. You will get a fair idea of how much you will pay as EMI during repayment. Based on this, you can make a call on the loan amount. If the EMI for a particular amount is too high for you to manage, you can go for a longer repayment period or lower your loan amount.
2) You can get a feel for the repayment period of your loan. When you enter the loan details you are applying for, including the amount and interest rate, it will show the repayment period. It will help you with the planning of your EMIs.
3) Depending on the interest rate of the loan and the repayment period, the amount you will be paying in total will vary. You can use an EMI calculator to get an approximate idea of the amount you will pay in interest at different rates. Rates vary from lender to lender.
4) Using a personal loan repayment calculator is much easier than manual calculations. Because the calculation is automated, there is little to no room for error. Moreover, as the personal repayment calculator gives you results immediately, you save time. Manual calculations, on the other hand, take longer.
Tips for Managing EMIs
To efficiently manage EMIs, follow these tips:
1) Choose a practical repayment plan: Your repayment plan should be in tune with your cash flow. It can be tricky if you have a large loan with a short repayment period. In such cases, you will have to make a high monthly repayment through EMIs.
And if you don’t have enough money in your monthly salary to pay the amount, you may find yourself in a very difficult situation. A better option would be a repayment option with a lower monthly repayment amount. You can do this by insisting on having a longer repayment period.
2) Automate EMIs: Automating the payment of EMIs from your bank account will ensure that you do not have to worry about it every month.
It is one of the best ways to manage EMIs and avoid late payments. By doing this, you will create a good impression with your bank, improve your credit score, and get better future terms and conditions on your loans.
3) Keep track of your debt: Many banks offer free debt consolidation services that allow you to combine all your debt, such as credit cards, personal loans, and mortgages, into one single loan.
This way, you can make one single payment per month, which will help you avoid late payments. Even manual debt tracking can give you an idea of your financial condition. You can then recalibrate your payments based on it.
How to Automate EMI payments?
Automating your monthly payments is one of the best ways to manage them. It can be done in two ways. The first and easiest way is to use the facility offered by your bank or lender. Most lenders offer automated EMI options today. You can also use third-party loan payment software. However, you will have to ensure that you use the safe ones. You can set up recurring payments, send reminders to make payments, etc.
Some even offer loan consolidation services that help you combine all your debt into one single loan, as discussed earlier. The loan payment software can also help you understand your cash flow and see where your money is going. You can see how much you spend on loans, credit card payments, insurance premiums, etc.
Once you automate EMIs with your bank, you don’t have to make repayments every month manually. EMIs will be deducted automatically every month.
Final Words
Depending on your income and repaying ability, different banks offer different loan products to meet your borrowing needs. Ideally, your loan repayment should be made on time and in full.
Unlike other types of loans, personal loans have shorter repayment times and higher interest rates. Borrowers often find themselves in a difficult position if they don’t work out the repayment plan beforehand with an eye on their cash flow.
You can plan your loan repayments with the scientific and easy-to-use personal loan repayment calculator developed by Piramal Finance. It will help you manage your loan repayments in the easiest way possible.