While online EMI calculators are simple to use, it is still very common for a lot of people to end up making mistakes. Read this post to know some of the most common mistakes that you should avoid when using one such calculator.
After waiting for years, you’ve finally decided that it’s time to purchase a home of your own. But even before you start hunting for the property or browse through the lenders, it is highly recommended that you should first use an online EMI calculator to get a fair idea of what the loan would cost you on a monthly basis.
There are now online EMI calculators to help eliminate the hassles of manual calculations that are highly prone to errors. But while these calculators are generally easy to use, people often end up making mistakes that can severely affect the calculation. If you are planning to use one such calculator soon, these are some of the most common mistakes that you should avoid-
- Not entering the Right Loan Amount
The loan calculator would require you to enter the loan amount, the tenure of the loan and interest rate for calculating the EMI. All the three factors have equal importance on the final result of the calculation. However, a lot of people do not have a clear idea of how much they’d like to borrow or how much they are eligible to borrow.
As a result, they end up entering a random or wrong loan amount in the calculator. Needless to say, the result would surely be higher or lower than the actual EMI amount if the loan amount is incorrect.
- Not selecting the right Interest Rate
If you are yet to get in touch with the bank to discuss the loan, it can be difficult to just put any random interest rate in the calculator. Owing to the tenure of the home loan and the money involved, smallest of differences in the interest rate would mean a difference of lakhs of rupees.
Just like the loan amount, if the interest rate is wrong, the calculation would be wrong too. Browse through the website of the lender, and you’d surely find the standard rate at which the lender offers home loans.
- Not knowing the Total Loan Burden
While you might be planning to take a loan of Rs. 50 lakhs which you’d like to pay over a period of 20 years, the interest charged by the lender would significantly increase the total amount you repay over 20 years.
Some of the EMI calculators also offer the total liability by adding the principal or the amount you borrow, and the interest charged by the bank. This helps you know the total money that you’d repay to the lender by the time the entire loan is repaid.
- Selecting a Loan Tenure that the Lender does not Offer
EMI calculators allow you to adjust the three factors and see how they change the EMI amount. However, in a bid to reduce the monthly EMI, a lot of people select a loan tenure that their lender does not offer.
Avoid such confusions by first going through the standard terms and conditions of the lender you’re planning to select to get accurate EMI calculation.
- Keeping the EMI Very Low
While it’d surely be great to choose the lowest possible EMI, you should know that lower EMI means a longer loan tenure. Moreover, even the total interest you repay to the lender increases when the loan tenure is increased.
Rather than going for the lowest EMI when using a home loan EMI calculator, analyse your financial condition, existing liabilities and expenses to reach a better conclusion. This would ensure that you do not end up paying more than you need to.
Loan EMI calculators are great for people looking to take a home loan. They are highly efficient and accurate and allow you to calculate the EMI of your loan within seconds. Just avoid the mistakes discussed above, and you are sure to experience the utmost convenience and accuracy every time.