Loan Prepayment Calculator
Prepayment is a facility provided by some lenders that allows you to pay off a large of the loan at one go. This feature is especially beneficial if you have idle funds or savings lying around. The funds you possess act as the prepaid amount and help you save on interest payments.
The Working of Prepayment Calculators
Prepayment calculators require the same fields mentioned in the final calculation for EMI calculators—principal amount, tenure, and interest rate. Once you fill these up and your EMI is calculated, you must enter the prepayment amount which must be at least three times the EMI amount. Upon successful calculation, you get a revised EMI, which will be much lesser than the original, and the revised tenure.
Loan Foreclosure Calculator
Foreclosure is a feature that allows you to completely pay off the debt before the end of tenure. Instead of paying in installments, you pay at one go in order to clear the balance. Foreclosing the loan is beneficial as it frees you from the liability of being in debt to a financial institution. Before you sign up for a loan with a lender, you should ask if they charge any penalties for early settlement. Usually, financial institutions charge 1-4% of the payable amount. However, there are some who do not impose any penalties.
How do you use the foreclosure calculator?
The calculation is based on the principal, tenure, and interest rate combination. Once your EMI is calculated, you enter (or adjust the slider) the number of paid EMIs, and the month of foreclosure. The foreclosure month is the period when you decide to foreclose the outstanding debt. For instance, if you take a loan of Rs.3 lakh for 3 years (36 months) at 10% rate of interest, and decide to foreclose on the 5th month after paying EMIs for 4 months, the foreclosure amount (final debt clearance) will be Rs.2,70,919.
Utilizing these calculators is an integral part of better financial planning. Important as they are, you must never turn away from seeking help from financial experts because they can help you take an informed decision.
Conclusion
Planning your finances is crucial when you’re looking to save for emergencies. If you’ve applied for a loan, read on to know about its sanction and disbursal process.
Images: ” Thinking on Personal Loan, personal finance conceptual /Shutterstock.com“
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