How To Find Out Loan Eligibility From Personal Loan Calculator

A personal loan is one of the most popular loan options for people because it is both unconditional and unsecured. This means a borrower will not have to put up any security to borrow and he has the freedom to use funds for whatever purpose except for illegal or criminal activities.

There are many lenders who give out personal loans to borrowers. However, each lender has their own guideline or eligibility criteria for giving out these personal loans. The eligibility criteria are clearly displayed on the lender’s website. However, there is one more way of finding out the personal loan eligibility, using a personal loan EMI calculator.

What is it?

A personal loan calculator can be used to find out the monthly instalment amount on a personal loan. To find out the monthly instalment amount, you need to input the following items:

• Loan principal
• Rate of interest
• Tenure of the loan

Once you input these items and submit it, the calculator automatically calculates the monthly instalment amount. Some personal loan calculators also display the amortisation schedule which gives the breakup of the instalment into principal repayment and interest payment.

The EMI calculator automatically calculates the value of the instalment using an inbuilt formula. This calculator is available for free on the lender’s website for potential borrowers to use. You can find out the impact of an increasing loan tenure on the personal loan EMI through the calculator.

How to use EMI calculator for personal loan eligibility?

Some EMI calculators also ask for additional information such as:

• Income of the borrower
• Credit score
• Any existing EMIs

Based on these factors, they automatically calculate the principal amount that the borrower can borrow. These EMI calculators also calculate eligibility. If the credit score is low or the income is low, then the rate of interest on the loan is also higher to accommodate the additional risk in the loan. Once you calculate how much loan you are eligible for, you can accordingly make the loan application.

Knowing the amount, a lender will lend to you is important so that you apply for the eligible amount. Also, a personal loan is unsecured, so it depends on your credit score and repayment ability. If you can improve your credit score and then apply for a personal loan, it will improve your eligibility and reduce the rate of interest on your loan. You can also negotiate to reduce charges on your loan if you have strong financials. Most lenders have their eligibility criteria clearly displayed on their website.

Before applying for a personal loan, it is important to check this eligibility criteria so that if required, you can work on improving your eligibility first before applying. Using the personal loan calculator is a good way of guessing your eligibility based on the lender.

Arjit Chalmela is a finance student who loves to write in his free time. He has spent considerable time researching the foreign exchange rate.