When it comes to personal loans, one needs to check the EMIs and calculate how much one can pay for the loan. When a person is in debt, one needs to meet various needs that are essential for the person’s livelihood.
Here, one needs to find a plan through which one can make a shift where a person will spend more on debt repayment and can reduce the debt burden. To mitigate such risks, one needs a proper plan that will help the company make timely progress, which will help the company make strategic decisions with time.
One of the core components of the personal budget is that it helps a person make a plan so that they can meet their monthly needs, pay off debt, and save something if they do that strategically.
In this blog, we will examine some of the most common themes that can help one make progress and live a stress-free life.
- Putting the Wrong Loan Amount
The loan amount that a person has taken needs to be correctly entered so that one can calculate the EMI correctly. This will help a person have a clear metric of the budget and how much one needs to pay. Here, one can take a finance DSA app, where, in some of them, there are options to calculate the loan EMI.
It’s through the use of different types of loan amounts, one which one can enter, that will show a screwed format that one can use to make the budget. Here, one needs accurate information to get a full plan of how to organize their monthly spending, and to meet that one must look for ways through which one can manage their budget.
Therefore, one needs to put in the right EMI amount to get a full glimpse of the EMI payment and then make a budget plan.
- Not Considering the Loan Duration
Here, a person needs to consider the loan duration as it’s important to understand how an individual feels about the amount of EMI they need to pay. The common mistake that the majority of consumers make is considering that there is a low EMI payment option that will fit within the budget of the person.
For example, if one purchases a laptop worth Rs 1 lakh, then in that case, the company will offer an EMI payment of maybe 2500 per month which makes the item affordable for a person.
However, the interest on that amount will be much higher as the loan will be prolonged for many years, and that will increase the cost of the laptop up to 2 to 2.5 fold at the end of the loan tenure.
- Overlooking the Processing Fees and Other Charges
The processing fee of a loan or an EMI-based purchase is that it takes a processing fee along with the loan amount, which gets included in the loan amount of the person. For example, a loan amount of Rs. 2 Lakh might bring a processing fee of 5k, which will be added to the loan amount, and then the interest will be applied on top of that.
One of the core factors of this loan amount is the processing fee, which is the earnings of the lender taken from your pocket. Here, one needs to consult with a good loan agent who can help the customer get the right loan amount with minimal or zero processing fee, and that will benefit the person to pay a little less at the end of the tenure.
- Not Checking the Prepayment Options
A person needs to consider the prepayment option of the loan as it reduces the loan EMI significantly and the interest rate also gets reduced. For example, a person needs to consider the fact that one must repay the loans earlier if it’s possible, as it allows them to have the chance of increasing their credit score. The lender can again trust the borrower when the person again needs the fund.
- Overlooking the Interest Rates
Finally, a person mustn’t overlook the interest rate, and through that, one can find a big difference in it when the interest rate changes even by a factor of 1.
Therefore, all these aspects are necessary to calculate their debt when a person is considering doing a monthly budget for savings and expenses.
