Among all other financial products, personal loans have garnered significant popularity in the last few years. According to a report by the Reserve Bank of India, personal loans occupied around 28% of total bank credit in the country between 2019 and 2020.
A general increase in the propensity to consume among the masses is largely responsible for this increased demand for personal loans.
- In the same period, NBFCs witnessed an increasing number of delinquencies in loans of up to Rs.50,000.
- Incidentally, most NBFC personal loans have similar origination volumes.
Borrowers need to avoid defaulting on their personal loan repayment at all cost. Otherwise, their credit scores may be hampered significantly.
A personal loan EMI calculator can help a borrower gauge a suitable EMI, principal, interest rate and other aspects of a personal loan, that can be settled easily without disturbing his/her finances.
How does an EMI calculator help personal loan borrowers?
A personal loan EMI calculator is a specialised online tool, which enables borrowers to check their liabilities from such a credit before opting for it. To calculate the instalments and interest cost, one would need to provide a few essential details regarding their loans. Following is a rundown of the information required –
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Principal –
Individuals would need to start by providing the amount they want to borrow as personal loans. Higher loan amounts would result in increased EMIs and vice versa. For example, a borrower opting for a credit of Rs.4 lakh will need to service higher EMIs when compared to another individual who acquires Rs.2 lakh as loan.
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Interest rate –
Personal loan interest rate tends to differ from one financial institution to another. Lower interest charges benefit borrowers significantly, as it would mean lower EMIs and total cost of a loan. Providing an accurate interest rate is essential for personal loan EMI calculator usage.
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Tenure –
The period during which one needs to repay the entire loan principal, along with interest, is known as its tenure. Reputed financial institutions offer flexible repayment tenure for such loans, which generally range between 12 months to 60 months. After entering these details, a calculator tool will quickly assess one’s personal loan liabilities. A borrower should crunch these figures to plan repayment even before opting for such a loan. Apart from computing monthly liabilities, a personal loan eligibility calculator can help one determine the amount he/she can avail as loans, based on credit history, income, age and other factors. Such calculators provide simple ways to manage debt.
Improving eligibility for a personal loan
If a borrower is unable to meet the basic eligibility set by the financial lender, he/she may fail to acquire personal loans. Thus, in such instances, one would need to improve personal loan eligibility before applying. Here are some steps to ensure the same –
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Build credit score
CIBIL score is the measure of an individual’s creditworthiness, based on his/her past credit management. Besides assessing one’s score, a potential borrower should also know how CIBIL score is important for personal lending. This scale gives NBFCs an idea regarding the risk profile associated with a particular borrower.
- According to a survey, around 52% of Indian respondents are aware of what a CIBIL score is.
- On the flip side, around 68% were clueless regarding their own credit scores.
A borrower must check ratings beforehand to enjoy a seamless small personal loan process. Additionally, certain financial institutions, such as Bajaj Finserv provide pre-approved offers to ensure fast and simple application. These offers are available on several financial products, such as personal loans, business loans and more. You can check your pre-approved offer by submitting a few essential details.
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Show higher income
Individuals who failed to acquire personal loans in the past should consider reapplying once they acquire a raise or a pay hike. With an increase in your earnings, the chances of availing such unsecured loans are also boosted.
Still, keep in mind that an applicant should calculate personal loan EMI with a calculator. Not doing the same can lead to enhanced financial strain on the borrower, unnecessarily.
Must Read: Calculate Your Eligibility Through Home Loan Eligibility Calculator Online
