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EMI calculators: An essential tool to support the golden rules for loan borrowing

“In an ideal world, every individual would have sufficient funds for every needs. However, this cannot be said for the same in reality. In this reality, we would need to borrow funds to meet our goals, whether real or imagined. And with so many banks and financial institutes offering a wide range of options along with low rates, quick disbursals an easy processes, you may be become overwhelmed with the significance of it.

While the financial market and its conditions may change over time, the way loans are being disbursed and its prudent borrowing will remain unchanged for a long time. Any by following the golden rules of borrowing, you will get, only the best ideas possible. To assist you in this process, we provide you with the EMI calculator, and how it can assist you.

Don’t borrow more than you can repay:

The first rule you need to remember is live within your means. When taking on a loan, you must take one that is easy to repay. Certain statistics indicate that certain loans should not exceed certain percentage of your income. For example, the car EMI’s should not exceed 15% of your income. Similarly, a personal loan should not exceed 10% of your net monthly income. If your EMI’s consume a large sum of your income, it will impact other critical financial goals. To keep these percentages in check, you can always use the EMI calculator to calculate the ideal amount you need as EMIs for any loans, while protecting your income.

Keep your tenure as short as possible

May individuals are tempted to opt for long loan tenures when borrowing as they offer the convenience to repay the borrowed funds with ease. However, with long tenures, you will end up paying for larger EMI’s. Therefore, it is best if you take a loan for the shortest tenure you can afford. So how can you calculate the right loan tenure with the right outcome? By using the EMI calculator you can calculate the ideal outcome that will suit your need. If needed, you can adjust the loan tenure to suit your need when required. However, you must ensure you pay your EMIs regularly and in in a timely manner.

Avoid borrowing to splurge or invest

As far as possible, avoid borrowing funds to re – invest. Even if you take a loan against ultra-safe investments such a fixed deposits or bonds, the interest earned through these options may not match the interest you will pay on your loan. Alternatively, investments such as equities are too volatile. If you need to take a loan, take a loan to build an asset. But always use the EMI calculator to know much loan rates are applicable to you before proceeding with the loan application.

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