A personal loan is one of the most sought-after borrowing solutions for a short-term liquidity crisis. Due to this, the demand for small ticket loans is increasing in India.
As per the CRIF High Mark report, till August 2020, almost 49% of personal loans disbursed, were of quantum below Rs.50,000.
- Around 50% of the total personal loan market constitutes small-ticket credit below Rs.5,000.
- Till August 2020, the small-ticket personal loan market reached Rs.12,000 crore.
This personal loan boom in India can be attributed to several factors like easy credit availability, higher disposable income and consequently, an increase in consumption.
However, the concern of accumulating bad loans or NPAs cannot be overlooked.
- As a report by S&P, the number of bad loans in India is anticipated to grow by 10% to 11% by March 2021 compared to 7.6% in September 2020.
This data is indicative of irregular repayment patterns of borrowers, owing to a slow economy. However, individually, borrowers can help in bringing down the amount by ensuring regular repayment of the credits availed, alongside comprehensive financial planning. In this regard, an online financial tool like a personal loan EMI calculator can prove to be beneficial.
How a personal loan EMI calculator helps in availing a loan?
Repaying a personal loan on time helps reduce the chances of default and improves the credit profile of borrowers. Consequently, it helps to ease the process of availing any credit in the near future.
Using a personal loan EMI calculator can assist borrowers in availing a quick personal loan in the following ways.
Helps to estimate overall borrowing cost
The EMI of a personal loan depends primarily on the interest rate that is offered against it. An EMI calculator requires the interest rate, loan amount, and chosen tenure of the credit to calculate the monthly installments payable. Besides EMI, this online calculator also gives the interest payable, and overall cost of borrowing, including a breakup of the principal and interest amount.
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Using this calculator, one can know how they can avail a better interest rate for a loan. For instance, borrowers with a CIBIL score above 750 can negotiate for a lower interest rate.
Understanding the repayment schedule
Another benefit of using an EMI calculator is that borrowers can get their repayment structure breakup. Since the interest rate calculator denotes the amount accurately, individuals can keep their financial planning updated. It will assist borrowers to manage their personal loan EMI repayment efficiently.
Selected NBFC like Bajaj Finserv also provides a pie-chart representation of the total interest and principal amount for borrower’s convenience.
This NBFC also extends pre-approved offers that further simplify the borrowing process. Besides personal loans, such offers are also available on various financial products like business loans, credit cards, etc. All you have to do is enter your name and contact number to check your pre-approved offer instantly.
Choosing the right tenure and amount
This calculator enables individuals to check the loan amount and tenure in different combinations to suit their financial capabilities. For boosted convenience, they can also calculate their FOIR to ensure credit approval.
For instance, Raj has a disposable income of Rs.70,000/month, and the sum of his total monthly obligation is Rs.30,000. In that case, according to formula, his/her FOIR would be= (30000/70000) *100= 42.86%.
Since it is less than 50%, most financial institutions are more likely to approve Raj’s loan application. In case the FOIR is more than that; potential borrowers can follow some useful tips to improve personal loan eligibility. However, before applying for a personal loan, they need to check the eligibility for the same.
- Since almost 40% of the total outstanding loan is now under a moratorium, lenders may set stringent eligibility to sanction the funds.
Thus, for guaranteed approval, individuals can use a personal loan eligibility calculator to verify the same.
With this calculator and other financial tools, borrowers can assess how much personal loan they can get on their salary. An EMI calculator is thus instrumental in facilitating smooth repayment of the loan and ensuring a hassle-free borrowing experience.