Whether you’re looking to borrow via a quick personal loan or a big-ticket home loan, knowing all about the loan EMI structure and other particulars is absolutely key. Inadequate loan management can have a dire effect on your finances and smart planning can help you avoid it altogether. To achieve this, the personal loan calculator is a particularly helpful tool as it gives you accurate, in-depth information pertaining to your debt repayment.

To help you understand the true value of this free online tool, here are 5 ways to use the EMI calculator before you borrow.

Take advantage of its free and accessible nature for accurate results

While there are few ways to compute your personal loan EMIs, such as using the EMI formula on paper or the Microsoft Excel function, using the EMI calculator is infinitely easier. To add to that, the calculator is freely available and easy to use, even for those who aren’t tech-savvy. This is because you can compute accurate results by simply filling in the required fields and the calculator does the rest. In some cases, you may not even have to enter a value, if the EMI calculator is built with a slider option. This makes it a lot easier to use, especially since it dynamically updates new results every time you make a change.

Compare lenders based on interest rates to find the best offering

Besides giving insight into your personal loan EMI amount, the EMI calculator helps you compare lenders vis-à-vis their offerings. As an EMI calculator displays your total outgo, for a given interest rate, tenor and principal amount, you can use the tool to identify the best lender for your profile. This is a smart way to weed out offerings that may have attractive lures of instant or quick personal loan financing but in reality, have unaffordable long-term costs.

Plan your monthly instalments beforehand to keep your budget healthy

Planning for loan repayment is crucial to maintain financial well-being and the EMI calculator plays a key role here. Since it gives a clear figure of your monthly instalments, you can use this information to decide upon whether or not the loan fits in your budget. This is the stage at which you must consider making changes to your lifestyle or the required loan amount and tenor as your goal should be to ensure that your instalments alongside your monthly spends do not cause you to default on even a single loan EMI.

Calculate your total interest outgo to determine the cost of borrowing with ease

The EMI calculator is a highly-efficient tool you can use to determine the cost of borrowing via a given offering. It computes the total interest outgo over the entire tenor and shows you exactly how much you can expect to pay. Assessing your loan EMI amounts and your total debt outgo should be done hand in hand and once you strike a balance between the two, you can apply for funding.

Once again, you can tweak the principal and tenor to find a suitable structure. While an increase in the principal increases both the loan EMIs and the net debt outgo, reducing the tenor increases the EMI amount, but reduces your total interest outgo. However, increasing the tenor, reduces the loan EMI amount but increases your total interest outgo.

Access the amortisation table for a breakdown of your loan EMIs

The amortisation table is an excellent resource you can use to clearly see how your instalments are contributing toward clearing your debt. Generally, in the initial phases of repayment, the interest component of your loan EMI is higher and with every payment, it steadily decreases. This table can be of immense help when planning part-prepayments as it tells you how much of the principal and interest is left to be paid.

All of the above uses of an EMI calculator are important for borrowing smartly but to truly stay cost-effective, you must also choose the right instrument and lender. For instance, if you’re looking to finance travel, weddings, emergencies or higher education, opting for the Bajaj Finserv Personal Loan is a good bet. Here, you get access to a collateral-free sanction of up to Rs.25 lakh, that you can repay over a flexible tenor ranging up to 60 months at a competitive rate of interest. To enjoy these features and more, check your pre-approved offer online and get access to a customised personal loan offering.