Taking a personal loan is a big financial decision. With so many banks and NBFCs offering personal loans, choosing the best loan offer can get confusing. A personal loan calculator can be helpful to you to avoid such confusion.
A loan calculator is an online tool which lets you calculate EMIs and interest for a loan amount based on factors like interest rate, tenure, processing fees, etc.. Using a loan calculator to analyze different loan offers is one of the smartest ways to make the right borrowing decision.
This post will share expert tips and tricks to compare personal loan offers using a loan calculator.
Compare Interest Rates of Different Lenders
The interest rate greatly impacts your loan’s monthly installments and total interest paid. When using a loan calculator, input the loan amount and tenure first. Then, compare how the EMI and interest component vary for lenders’ different interest rates.
Opting for a lower interest rate loan can lead to significant savings. IDFC FIRST Bank offers the lowest interest rates, starting at 10.49% annually for salaried individuals.
Check the Total Interest Payable
The total interest payable is the extra amount you pay the lender over and above the principal amount borrowed when considering an online instant loan. When you input the required details, a loan calculator shows you the total interest payable.
To make an informed financial decision, it’s essential to compare the total interest payable for different loan terms and lenders when you’re looking for an online instant loan.
Analyse How Loan Tenure Impacts EMI and Interest
Loan tenure is the duration you pay back the loan amount through EMIs. Longer loan tenures involve lower EMI but greater total interest outgo. Shorter loan tenures have higher EMIs with lower interest costs.
Use the loan calculator by changing the loan tenure value and noting its effect on EMI and interest payable. This will help you identify an optimal loan term for your finances.
Account for Processing Fees
In India, most lenders charge a one-time processing fee on personal loan disbursal. This processing fee usually is 1-3% of the total loan amount. Make sure to factor in the processing fee while using the loan calculator for different lenders.
Check Prepayment Options
Many lenders allow you to prepay or foreclose the loan before the end of the tenure to reduce interest costs. Check if the lender offers this flexibility and any charges for the same. Use the loan calculator to determine potential savings from prepayment at different stages of your loan tenure. This will help you make an informed choice about availing this benefit.
Conclusion
By following these tips and doing your due diligence with a loan calculator, you can identify and consider an online instant loan that best suits your financial needs and repayment capability. Don’t get overwhelmed comparing offers.
Just use a simple loan calculator to break down the numbers and costs. Focus on the interest rate, total interest payable, loan tenure, fees, and prepayment flexibility. This will help you make a well-informed choice to achieve your financial goals through an affordable and suitable personal loan.