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A personal loan is typically a handful of funds, which you borrow from a lender for upgrading your lifestyle. Furniture for your new house, traveling, the latest gadget in the market or a big fat wedding- almost everything (obviously legal) that enhances your lifestyle in any form can be financed through personal loans.
Various banks and other financial institutions offer personal loans with simple terms with high loan amounts for flexible repayment tenures. You have the option of availing this loan for personal reasons mentioned above.
Just like other types of loans such as business loan, car loan, home loan, and more, in the case of personal loans also, you have to make repayments of the loan amount to your lender. This kind of loan, which is put to use for personal purposes, has a shorter loan period as compared to that of the other loans.
EMI (Equated Monthly Installment) is the amount of money to be repaid by the borrower of the loan to their lender monthly. This EMI is a fixed amount which is calculated using the EMI calculator at the time of obtaining the loan. It is based on the 3 basic variables- interest rate, loan tenure, and amount of the loan. The tenure of your personal loan is based on the amount of your loan.
As we have already discussed, a personal loan can be your way out from your financial stress and helps in enhancing your lifestyle. But are you still confused, whether or not to go for a personal loan? We have a solution for putting end to your confusion- the EMI Calculator.
The EMI calculator helps you in getting an idea of managing personal finances. Surviving in the economy like that of the Emirates, having a stable and smooth financial status is not very easy.
However, if you stay aware of the financial calculations and the market information, then it will become much easier for you to make a suitable financial decision for upgrading your personal life.
For calculating the EMI on your personal loan, the lender uses a simple formula. This formula includes three variables that have been discussed above- what is the amount of money obtained, at what interest rate and for how long. Following is the formula for calculating the EMI.
“P” refers to the loan amount
“i” refers to the personal loan interest rate
“n” refers to the tenure of the loan
You must definitely calculate your EMI for your personal loan before availing it. In case you are a salaried employee, then you must be earning a fixed amount of income every month. However, in case you are an entrepreneur, you may at times have to suffer a no-earning month too.
Anyway, in both these cases, you will have to keep a check on your regular expenses for survival. Whenever you opt for a loan, you make a promise to your lender that you will make the repayment of the borrowed money along with all the other charges within the tenure as fixed by them.
Hence, it is important to get an idea of the amount of cash outflow that will take place monthly before jumping into a loan market.
The initial and the basic step for the repayment of the personal loan begins with analyzing and then calculating the amount of EMI. While opting for a personal loan, the first thing you must be doing is analyzing the requirement that includes the exact amount of loan you need.
The next thing to be done is the self-evaluation of your capacity for repayment of the borrowed amount. You must be very clear about your loan repayment capacity. The loan repayment capacity involves the time duration wherein you can make the repayment of the loan without much impact on your regular lifestyle.
You can make use of the personal loan EMI calculator for calculating an estimate of the EMI in advance. Doing so will give you an idea about the EMI you will have to bear before borrowing the loan. Doing so will also help you in planning the finances accordingly and managing them more efficiently.
We all are aware that personal loans in the UAE are unsecured loans. Hence, there is no collateral or guarantor required in this case. If you, for whatever reason, fail to make the repayment of your personal loan, the bank would not be able to recover the amount outstanding from any guarantor as this option is not available to them.
The action that can be taken in such a situation may differ from one lender to another, which they would have mentioned already on the agreement of the loan.
Some lenders may choose to take legal action while some may give you a chance for settling it by making the payment of an amount that would be higher than the outstanding principal but lesser than the total amount outstanding including the rate of interest.
However, you must keep in mind that your credibility will be affected negatively if you do not pay your EMIs on time. This, in turn, will make it difficult for you to avail credit in the future. This is because any lender would review your credit history and rating before approving credit.
Suffice to Say!
The personal loan EMI calculator helps you in calculating the EMIs on your personal loan, which you have to pay to the lender monthly until the complete payment of the loan.
This monthly installment is dependent upon the amount of personal loan, its tenure, and the rate of interest charged on it. On the given amount of personal loan, rate of interest, and the loan tenure, this EMI calculator will allow you to have an estimate of the EMI you will have to pay.