Going to buy a house? Want to get a car? Planning to start a business? The need for a financing source is universal across all these requirements. There are many avenues of funding available for you to meet these requirements. However, keep in mind that your savings might not be enough or readily available to meet these needs and borrowing from family or friends will either put them in a tight spot or is something you’d prefer to avoid. Thus, these financing avenues become largely inaccessible as a result. However, there’s one convenient source of funding that will always be available to you – taking a loan.
There are various types of loans that are tailor-made to suit your financial requirements. Be it home loans, two-wheeler loans, or business loans, various banks and NBFCs provide loan offers designed specifically to meet these requirements. If you require funds for situations other than the ones discussed above, then you can always choose to go for a personal loan.
However, before taking a loan, you need to be wary of various factors such as your credit score, re-payment capabilities, interest rate, pre-approved offers, and most importantly, the EMI (Equated Monthly Instalments) that needs to be paid. Here are some reasons why you should calculate your EMI before opting for a loan.
Helps you place a limit on the total borrowing amount
On the face of it, taking a loan that will allow you to buy anything and everything you want without any compromises might sound like an excellent option. However, it’s possible that financing these needs might be quite strenuous and not exactly feasible. So, by calculating the EMI beforehand, you’ll be able to gauge how much EMI you can pay with ease.
Helps you choose an appropriate loan tenure
It’s recommended that you calculate the EMI you’ll have to pay on the loan amount for different repayment periods to nail the balance between your loan tenure and the monthly payments. A shorter loan tenure could mean that your total interest outflow will decrease at the cost of higher EMI payments. Meanwhile, a longer loan tenure could come with smaller EMI payments, which can ideally help you manage your finances better. By comparing these amounts with your financial capacity, you can settle upon a suitable repayment structure.
Helps you select an appropriate repayment scheme
Loans nowadays also have different repayment schemes. Prefer an EMI scheme with increasing monthly amounts? Take a step-up repayment plan. Want your EMIs to lessen over time to decrease the financial burden? Select a step-down repayment plan instead. Received a lump-sum amount that you want to use to pay off your loan early? Do a pre-payment or part-payment of your loan amount! The options you have are immense, and the choice between them becomes easier once you calculate your EMI beforehand.
These days, there are many types of loans available at your disposal to satisfy your financial needs. However, you should decide upon an appropriate loan tenure with manageable EMIs. To make this decision more comfortable, you should calculate your EMI amount beforehand. It will help you determine the total loan you want to take, choose a tenure that suits your finances, and opt for a repayment scheme that appeals to you the most. By doing so, you will be able to manage your finances efficiently, without having to worry about paying large sums month-on-month..