# How EMI Calculator is Important while Getting a Personal Loan?

If you’re reading this, chances are you’re either considering taking out a Personal Loan or you’re already in the process of repaying one. Either way, you’re not alone. Personal loans have become increasingly popular in recent years, as people turn to them for everything from consolidating debt to financing a wedding or home improvement project. But while personal loans can be a useful tool for managing finances, they can also be confusing and overwhelming – especially when it comes to understanding the Equated Monthly Installment (EMI) and how it affects your repayment plan.

What is an EMI Calculator?

An EMI calculator is a simple online tool that helps you calculate the monthly installments you will need for your personal loan. The calculator takes into consideration the following factors:

Loan Amount: The total amount you wish to borrow from the lender.

Interest Rate: The rate at which the lender charges interest on the loan amount.

Tenure: The duration for which you wish to take the loan.

Once you enter these details into the calculator, it will display the estimated EMI that you will need to pay each month, along with the total interest payable and the overall cost of the loan.

Why is an EMI Calculator Important When Getting a Personal Loan?

A Personal Loan EMI Calculator helps you determine your EMI, which is the monthly amount you must repay to settle your loan. Using an EMI calculator, you can plan your finances better and avoid any unexpected surprises. Let’s dive deeper into the benefits of using an EMI calculator when getting a personal loan.

1. Helps You Plan Your Finances

One of the most significant advantages of using an EMI calculator is that it allows you to plan your finances effectively. By entering different loan amounts, interest rates, and tenures, you can see how much your monthly payments would be. This information helps you decide whether you can afford the loan and makes it easier to budget for your expenses.

For instance, let’s say you want to take out a personal loan of Rs 5 lakh for five years. Using an EMI calculator, you can see that your monthly payment would be around Rs 10,629 at an interest rate of 12%. With this information, you can adjust your budget and ensure you have enough funds to meet your other financial obligations.

1. Saves You Money

An EMI calculator can save you money by helping you choose the best loan option. Different lenders offer varying interest rates and terms, and an EMI calculator allows you to compare these offers easily. By plugging in the numbers, you can see which lender offers the lowest EMI and choose that option to save money in the long run. According to a report by the Reserve Bank of India (RBI), personal loans account for nearly 20% of all non-food credit disbursed by banks in India. With so many people relying on personal loans, getting the best deal is crucial. An EMI calculator helps you do just that.

1. Help Avoid Unpleasant Surprises

Imagine taking out a personal loan only to realise later that your monthly payments are higher than expected. This situation can lead to financial stress and difficulties in meeting your other expenses. An EMI calculator eliminates such unpleasant surprises by giving you a clear picture of what to expect.

By inputting different scenarios into the calculator, you can prepare yourself for various eventualities. For example, if you’re worried about rising interest rates, you can use the calculator to see how an increase in interest would affect your EMIs. This knowledge enables you to plan and avoid any unwanted shocks.

1. Reduces Borrowing Costs

Besides helping you plan your finances and save money, an EMI calculator can also reduce your borrowing costs. By calculating your EMIs accurately, you can avoid paying unnecessary interest charges.

Let’s assume you take out a personal loan of Rs 1 lakh for three years at an interest rate of 15%. Without using an EMI calculator, you might end up paying more than Rs 1.4 lakh in total, including interest charges. However, by using the calculator, you can adjust your loan term to bring down your total cost to around Rs 1.2 lakh – a savings of over Rs 20,000!

## How to Use an EMI Calculator

Now that we understand the significance of an EMI calculator let’s examine how to utilise one effectively:

Step 1 – Choose the Calculator

Numerous EMI calculators are available online, both on lender websites and third-party financial sites. Select a reliable calculator that asks for the necessary inputs, such as loan amount, interest rate, and loan tenure. Some calculators may request additional information like processing fees or prepayment penalties, which can further customise your results.

Step 2 – Input Loan Details

Enter the loan amount you wish to borrow, the interest rate offered by the lender, and the loan tenure in months. Ensure that you enter the correct values to obtain accurate EMI calculations.