Taking a loan can be a helpful way to acquire some funds in times of need. One might not have the necessary funds to meet their goals or financial requirements. To solve this issue, an individual can apply for a loan depending on the use of funds.
Personal loans are loans offered by banks to finance multiple things. These loans can finance a wedding, a foreign trip, pay medical bills or help one get some funds in emergencies. Personal loans are easy to apply for and disburse quickly, but one still needs to plan out their borrowing strategy carefully. The planning process is easier with the help of tools like a personal loan calculator. Here is how they help plan your finances:
Financial goals
Before taking a loan, it is essential to know your financial goals and have a financial plan in place. A financial plan will help budget the funds and help one decide on the amount that needs to be borrowed from the loan. A financial goal also provides a timeline for repaying the money.
Eligibility
One needs to know whether they are eligible for a personal loan. To apply for a personal loan, one needs to be an Indian citizen between the age of 21 to 67 years. One should have an employment history of at least two years and be employed with the current employer for at least one year. An individual can use a personal loan eligibility calculator to find out more details about their eligibility.
EMI amount
Equated Monthly Installment is a way a loan is repaid in periodic intervals. The EMI is a substantial monthly expense; therefore, it is a significant factor for individuals. The EMI amount changes with a change in the interest rate or the tenure for which the loan is borrowed. With a personal loan calculator, one can enter the principal amount, interest rate and duration to ascertain the exact EMI amount.
Comparing interest rates
Interest rates is a significant amount repaid once a loan is borrowed. Higher interest rates lead to a higher EMI amount. Higher EMIs result in greater monthly expenses for an individual. Therefore, one needs to compare the interest rates offered by lenders. Along with the interest rate, it is essential also to consider the additional costs associated with borrowing a loan. These costs include processing fees, late payment fees, prepayment fees, etc.
The availability of several tools have made it easier to plan out loans and manage their debt quickly. Individuals should make the most of these free online tools to borrow smartly.
