Most of the types of loans financial institutions offer are secured loans. If you take a loan to buy a flat, the flat remains mortgaged to the bank or lender as security. It is the same with vehicle loans. Student loans and personal loans are the commonest types of unsecured loans, that is, loans issued without any security. A personal loan can be a secured loan when you pawn a piece of jewelry or some valuable. Whatever the requirement may be, an online loan eligibility calculator makes the task of computing and calculating interest rates far easier than it was before.
Why does the Need to calculate the Interest Rate arises in case of Personal Loans?
However, usually personal loans are unsecured and there is no security to be assessed, the usual delay for ascertaining the ownership and evaluation of the property being offered as security does not take place. Naturally the additional risk taken by the lender has to be compensated by higher rates of interest. So, when considering a personal loan, the rate of interest is of great importance. Alongside this one have to keep track of the charges like processing fees, EMI bounce charges, Penal Interest rate and secure online transaction fee. An eligibility calculator for personal loans is the go-to tool that gives you an accurate idea about how much should one be set aside each month from their salary once loan repayment starts.
If you wish to arrive at the interest payable yourself, so that you may check whether the consultant or the website is offering you genuine figures, you should take the help of calculators and spreadsheets because it is very cumbersome to calculate interests separately for each segment of time when a certain balance or a certain rate of interest was available. Interest calculated on reducing balance basis most beneficial for you but these are rarely offered.
How Do Interest Rate Calculations Change With Changing Loan Scenarios?
On the other hand, when you have the scope of adding to your loan periodically such as you can do while using a credit card, then the calculation is carried out daily with the growing credit as a base. Still, is often found that it is better to take a personal loan and buy an appliance or a vehicle than to take a financing scheme from the retailer. Another sort of personal loan used mostly by businessmen is a current account or an overdraft account for meeting day to day exigencies of a business. Your overdraft limit is fixed and you need to pay interest only for the number of days for which you stay overdrawn by any sum. The interest rate is usually high like in the case of credit cards. Bajaj Finserv has one of the best loan eligibility calculators that calculate the interest rates and till now have helped hundreds of loyal clients to realize their dreams by providing the most competitive interest rates in the market today.
Difference of Fixed and Floating Loan Interests
If you find a scheme which charges you a fixed rate of interest for the tenure of the loan, go for it. You can plan and budget with ease and side step penal interest due to default. Nor do you have to keep watching the fluctuation in the going rate of interest. Personal loans more usually come with floating rate of interest. The lender and borrower both bet upon a favorable movement in the rate of interest. This is difficult to plan for. In general personal loans should be paid off as soon as possible, while factoring in the cost of prepayment penalty. A personal loan eligibility calculator takes into account all these scenarios when the data is provided, the algorithms determining the exact interest rates, as well as the final EMI payable per month when the loan amount is finally disbursed and the repayments start from the following months.
Calculating interest rates on loan amounts might seem like a simple task today with these advanced online calculators but it was not always so and errors often cropped up with manual calculations. Thanks to technology, every user now rests easy with the exact interest rates calculated on their personal loans.