Know Simple Steps To Calculate Your Debt Payment Using An Interest Rate Calculator

EMI pay-outs are integral to any borrowing, and proper planning helps one clear debt efficiently. Hence, before proceeding with the personal loan application process, borrowers must compute the total loan expenditure and EMI liabilities, helping them make an informed decision. 

Moreover, it will prevent them from defaulting on the loan repayment and falling into a debt trap. An interest calculator is a simulation that gives borrowers deep insight and transparency regarding the EMI pay-outs and total cost of borrowing. 

Steps to calculate your debt using an interest rate calculator

Borrowers can easily calculate their debts and manage them accordingly with the help of a personal loan EMI calculator. Here are the steps to help borrowers compute their debt or EMI liability.

Step 1:  Select the personal loan EMI calculator from the selected lender’s official website. 

Step 2: Feed loan amount by either entering it in the given box or adjusting the first slider. 

Step 3: Adjust the second slider to set the quoted interest rate.

Step 4: Finally, set the chosen loan tenor using the slider.

As borrowers set these three sliders, the EMI liability gets displayed on screen. Borrowers can get further clarity of other existing debts by changing the sliders as per the opted loan amount, interest rate, and loan tenor. 

How does a personal loan interest calculator work?

A personal loan interest or EMI calculator works based on the given mathematical formula:

EMI= [P x R x (1+R) ^N] / [(1+R) ^N-1]

Where P is loan amount, R indicates interest rate, and N denotes loan tenor in months.

For instance, if a borrower has opted for a loan amount of Rs.10 lakh at an interest of 13% and chose a loan tenor of 4 years, he or she will have to bear Rs.26,827 as EMI liability, Rs.2,87,720 as total interest payable and Rs.12,87,720 as total amount payable at the end of the repayment tenor. 

Things that can be done with a personal loan EMI calculator

Besides knowing the personal loan meaning and how to compute EMI amount beforehand, borrowers should also learn how a personal loan EMI calculator helps borrowers:

• Compute EMI amount: Using an EMI calculator helps one compute the EMI amount. This helps to fetch the maximum personal loan amount and manage it efficiently without missing out on the payment of monthly instalments. Moreover, borrowers access the amortisation schedule and know the number of EMIs they have to pay towards loan repayment. 
• Choose the best loan tenor: Borrowers can also find the right personal tenor using a personal loan EMI calculator. Choosing a suitable loan tenor will help them repay the loan amount on time without undergoing a monetary burden. Borrowers can keep altering the loan principal and the resultant EMI amount until they get an appropriate loan tenor. 

Negotiate lending rate: Depending on the loan amount and loan tenor, borrowers are charged personal loan interest rates. As borrowers get an overview of the entire borrowing in advance, they can negotiate for affordable interest rates in order to minimise the cost of borrowing. Using a personal loan interest calculator, borrowers can see how a slight change in interest rate impacts the entire borrowing.

Moreover, borrowers should know other ways to avail of a better interest rate on a personal loan. 

• Compare different loan options: Borrowers can effectively compare different lenders and their offerings using an interest calculator and settle for one that best suits their financial status.
• Enhance credit score: Timely clearing out the debt enhances one’s credit score. A personal loan calculator maps out the entire repayment, ensuring that borrowers will repay the loan amount in time without delaying or missing out on EMI payment, hence leading to an improvement of the CIBIL score.

Apart from computing EMI amount in advance and negotiating interest rates, borrowers should also be well informed regarding the charges on a personal loan for debt consolidation. 

Besides keeping an update regarding the debts, borrowers should also check the specially-tailored pre-approved offers extended by leading financial institutions. These offers help streamline the loan application process and are available on a wide range of financial products like personal loans, business loans, credit cards, etc. Willing borrowers can check their pre-approved offers by submitting their names and contact details.

On the whole, a personal loan interest calculator helps borrowers gain insight regarding the loan expenditure and repayment liability, helping them decide whether availing of a loan will be feasible or not. Moreover, an interest calculator will also help borrowers compute their existing debts and clear them efficiently.