A personal loan in Singapore has become the go-to credit option when people are faced with financial shortfalls. Unlike other types of loans, such as car loans and mortgages, which are attached to collateral, a personal loan is unsecured. However, there are several things that you need to understand well before signing the loan agreement, and one of the most important is the equated monthly instalments (EMI). Keep reading to understand why you should use the personal loan EMI calculator in Singapore and Lendela.
A Brief Look at EMI Calculator
Equated monthly instalment (EMI) is the amount that you need to pay per month until the personal loan is fully repaid. It comprises the interest of the loan plus a small portion of the loan that is being repaid. To get the EMI of a personal loan, the principal and the interest are added and then divided by the number of months (loan term) that the loan needs to be repaid.
During the first months of the loan repayment, the interest component of EMI is high, but it goes down gradually as the principal decreases. Although EMI payment remains the same, the proportion of interest and principal will reduce with every monthly payment. Below is the formula used for EMI calculation:
Where P – is the principal loan amount, e – is the EMI, R- is the interest rate of the loan calculated on a monthly basis, and n- is the loan term in months.
When calculating EMI for a combination of interest rates, principal loan amounts, and loan term using the formula we have given above, it can be pretty challenging. For some people who were not good at college mathematics or are in different fields, the formula can be too much to handle. This is why you should use a personal loan EMI calculator.
How Do You Use a Personal Loan EMI Calculator?
As you go through the personal loan agreement and prepare to append your signature, a loan calculator makes it easy for you to determine the right amount to pay per month until the loan is over. To use the personal loan EMI calculator in Singapore, you need to key in the following information:
Loan term in months (or years)
Principal loan amount in Singapore dollars
Rate of the personal loan interest in Singapore
As soon as you enter the different values, the EMI calculator will recalculate and displace the amount to be paid every month. If you want to determine how much you can afford, it might be a good idea to use the personal loan calculator.
Personal Loan EMI Calculator: Four More Things to Factor
Now that you know how a personal loan EMI calculator works, there are a few more things that you need to factor in, your ability to repay, personal credit score, the lender, and how you want to repay the money.
Your Ability to Repay the Money
Before making the decision to take a personal loan in Singapore, you need to be prepared to repay it for the entire term. This involves re-looking at personal income against all the expenses and reviewing the remaining amount.
This is important because you will have deducted money for the family emergency kitty, insurance fund, food, rent, and transport, among other costs. The best way to do this is by reviewing your budget to ensure that the new personal loan is factored.
If you find that the amount going to repay your debts is surpassing the 30-35% mark of monthly income, it should be a red flag. To push it down, you might want to consider some austerity measures, such as cutting down on luxuries. For example, you might want to start using one car with your wife when going to work instead of two or cutting down the holiday to two as opposed to three every year.
Personal Credit Score
In Singapore, banks and financial institutions look at your credit score to determine your creditworthiness. If the score is poor, you are likely to get personal loans with high-interest rates. So, you might want to think of the best strategies to improve the score before making a loan application for a personal loan. Some good methods to consider are repaying the outstanding debts and maintaining a good credit mix.
The lender you borrow from will be a great determinant of the cost of the loan. For example, some financial institutions operate online and might be willing to approve loans that conventional banks would probably decline.
When selecting a lender, it is also important to also look at other attributes, such as loan processing fees and early repayment charges. To be sure of dealing with the right lenders, consider applying for a personal loan through Lendela.
The Loan Term
The loan term is another crucial component that you need to factor in when applying for a loan. If you want to keep the cost of the personal loan low, make sure to finish paying the loan as fast as possible. If you opt for a longer term, the monthly charges will be lower, but the amount payable will be higher.
Use Lendela when Applying a Personal Loan
The best way to apply for a personal loan in Singapore is using Lendela. Lendela.com is a loan comparison site that is developed to help make the application easy and fast. This means that instead of following multiple lenders and reviewing all their terms, Lendela will handle the task for you. Here is how it works:
You visit the Lendela website to submit the application for a loan (this is a very short process that only takes a couple of minutes).
The application is forwarded to different lenders who issue pre-approved offers back to you.
Review the offers and select the personal loan with the best terms and conditions.
You get help from Lendela to book an appointment with the lender so that you can sign the loan agreement and get your money.
Finally, sign the personal loan agreement, and the funds are released into your account.
A personal loan EMI calculator is one of the most important tools to use if you want to get a suitable loan. Lendela will come in handy to help make the process of the application fast, easy and convenient. Remember to always have a good plan for repaying the loan to avoid defaulting.