While EMI calculators are a great tool to help you plan your finances before you take on the loan, using them can sometimes be confusing. There are some Do’s and Don’ts of using EMI calculators. Keep reading to find out more.
When it comes to building or buying a property of your own, one of the most prominent factors involved is loans. There are so many different kinds of loans available in the market, which help you to save time and start building your business or your dream home without having to wait years and save up for it.
However, loans also come, with EMI. While an EMI is an amount you pay back every month for the loan you have taken, it can differ for every person. The EMI can be easily calculated and ascertained with an EMI calculator. If you have never used one before, here are a few do’s and don’ts you should remember:
- Loan Principle:
The principle that you choose is the amount that you are looking to borrow from the bank. It is the full amount that you are hoping to get. So, when you are choosing the loan principle on the loan EMI calculator, be realistic with your budget. Having a rough estimate/ construction cost in hand can definitely help you put in the right amount and plan better as well.
- Interest rate:
The interest rate with every bank/ financial institution differs. This is based on the amount you are looking for, the kind of property you wish to buy or build and of course the kind of credit score you have. Many banks give you a tentative bracket of the going interest rate on their website. Opt for the average interest rate to get a better idea.
- Loan tenure:
This again depends on the kind of loan you are taking. Most banks and financial institutions have EMI calculator given below the different loans to help you calculate at once. If you are looking for bigger loans such as housing or construction, set a realistic timeline to get a better EMI amount every month.
- Stick to one calculation:
Don’t just try out the loan calculator on one site or one bank and take its word as the law. Different banks offer different rates of interest and EMI options, so check them out to see what kind of amount you might be more comfortable with.
- Take its word entirely:
When you try out an EMI calculator, it can be a relief to see small EMI amounts as a result, but this is not fixed. The EMI calculators can only give you a tentative rate of interest and EMI amount. The final one will be fixed by the bank or the financial institution that you apply in so strictly, use this only as a reference!
- Not trying different variations:
When you have a loan EMI calculator to use, don’t just try one option and leave it at that. You have the freedom to try out different permutations and combinations to find out what kind of amount might suit you the best so fiddle around with it for a while!
EMI calculators can really help you understand the loan process and the amount you might have to shell out every month as your payment, but it is important to remember that it is only used as a reference. The EMI calculations can only be done once the bank fixes your loan amount and interest rate, so it is better not to get too attached to the numbers you receive otherwise.