The Most Common Mistakes While Using Personal Loan EMI Calculator

When you are approaching a bank or financial institute for a personal loan, you can always use the personal loan EMI calculator to help you select the best loan. While this tool is exceptionally helpful, one should know how it works. If you are unaware how it works, it might lead to several financial problems, especially when you will be using it to apply for a personal loan. The following are a few common mistakes:

It Is A Rough Estimate.

When you use the personal loan EMI calculator, you will be calculating your loan amount based on the combination of certain factors. This includes the combination of your principal loan amount, interest rate and tenure. You can be happy with calculation; interest rate depends on your income and repayment capability. Thus, it can change considerably. It isn’t under your control. So, it will be a mistake to assume that the EMI calculated by this calculator is a final loan offer. It is a rough estimate that is open to change.

Don’t Exploit A Basic Interest Rate.

As mentioned earlier, the personal loan EMI calculator uses a combination of different factors to calculate the best advance credit rate for you. While it is easier to adjust the loan amount to your requirement and the payment tenure as per your needs, it is hard to get a desirable interest rate. If you try avail as much loan possible with the offered interest rate, you may land in trouble. Your final personal loan offer may have a higher interest rate. Thus, you may land up availing a personal loan you cannot afford to repay. So, do not assume that offered personal loan interest rate is final till you receive an official offer.

Don’t Use Up Flexible Loan Tenure Entirely.

A personal loan can last anywhere between 1 to 5 years. In this course of time, several things can change, for example, you salary might increase or you might change your job. At such times, you might want to apply for another loan, for example an automobile or home loan. However, your risk increases due to previous unpaid loan. This prepayment comes with a prepayment charge. Therefore you will have to pay more than your regular EMI just to get rid of the previous loan. Don’t extend loan tenure beyond a certain point while using a personal loan EMI calculator. This can be a common mistake because it may lower EMI but increase your interest.

So, understand the potential value of this tool and use it to your best interest.