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How Emi Calculators Help You Plan Your Loan Repayments?
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An EMI calculator is provided by all financial institutions for their borrowers free of cost. This tool allows an individual to calculate their EMI with ease. The EMI is calculated using the principal loan amount, the interest charged and the tenure of the loan. The ways in which an EMI calculator helps individuals repay their loans are:
Plan in advance
An EMI calculator helps define the amount the borrower will be required to pay each month to the bank to repay the loan. Using the EMI calculator before the repayment process begins allows the borrower to plan in advance how to repay the loan amount. The borrower may start saving in advance to ensure that not defaults are made. Defaults can cause the financial institution to take serious action against the borrower and may also affect their credit score. This calculator also helps ensure that the borrower makes no mathematical errors when calculating their EMI. Doing so may cause then to pay the incorrect amount causing problems for the borrower.
Floating interest rate EMI estimate
When a borrower opts for a floating interest rate, it becomes difficult to plan in advance how much EMI they will be required to pay. For such situations one can use the EMI calculator and calculate an optimistic and pessimistic EMI amount based on the highest and the lowest rate the interest might go to. This helps the borrower be prepared in advance for any changes in the interest rate. It helps prevent defaults on the borrower’s part.
Prepayment of loan
Many individuals may opt for a longer tenure with plans of prepaying the loan amount to the financial institution. This however can prove to be harmful as the EMIs charged in the early years pay off more of the interest than the principal loan amount. The EMI calculator allows the individual to not only calculate their EMIs but also find out how much of the month’s EMI is repaying the interest charged and how much is repaying the actual loan amount. With the help of this tool one can find out when is the best time to prepay the entire loan amount without losing lager sums of money.
An EMI calculator provides a number of benefits for customers both before and after the loan application have been approved. All financial institutions encourage their customers to use this tool to help them calculate their EMI and also sure that they repay the right amount on time. Before you apply for a loan, it is crucial to use an EMI calculator.
Author Bio :
The author is a seasoned writer on finance topics and through her writing; she articulates aspects of home loan that are important to people availing the housing loan facility. She writes about a variety of topics covering the home loan documents, rates, & EMI calculator that help to make the best decision.
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