How can my credit score impact the calculation of my loan amount?

There are ample factors that affect your loan amount. However, credit score is a direct impact before your loan approval is granted. Credit score can either help or affect your instant personal loan. Buddy Loan is one of the loan aggregators that will help you enhance your credit score with vivid repayment options, Instant Personal Loan

Your financial behavior will chain your financial plans to help build credit score. Here are some key factors you will have to consider before availing an instant loan.  

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Income liquidity: This factor can assess your capacity to repay an instant personal loan. It is one of the assurances you can give your lender for repayment.

Age: It is important you are under the brackets of this eligibility criteria to avail a personal loan easily. If your age exceeds the criteria, your loans will be easily rejected.

Job instability: If you are repeatedly changing jobs it could be difficult and can even reject your financial institution. 

 

With all the primary factors affecting your loan approval, let us understand how exactly availing a loan affects your loan approval.  

·         Nobody wants to have a bad credit score before lending the loan. Any default I payments, check bounces, etc can easily push you tot the least end of credit score.

·         In such cases, there are high chances of your loan application getting rejected.

·         The lower the EMI, the longer the tenure. But your payments are spread across the full tenure which will help you, if you’re drawing low salary. It will increase your credit scores.

·         Financial bodies and credit brokers sort the loan application by having a record of it. They would asses your application with the history and either decline or approve the loan application.

·         It is advisable to apply a loan only when in dire need than over using for unnecessary or small reasons.

Buddy Loan offers disburses loans stating from Rs. 1000 to Rs.15 lakhs. 

 

How exactly does applying for a loan affect the credit score?

By now, you know that availing any personal loan will affect your credit score. If you avail a loan with an outstanding debt at hand, you’re in a soup.

Credit scores and its’ agencies list your financial activity. Hence, a healthy financial behavior is always recommended.

It is like your overall average wouldn’t make a big difference with a new loan all at once. So, it is a journey of years that can create a good credit score. Paying on time, no bounces, and of course not defaulting the last EMI.

Thus, the impact of new loan will be less on the credit score. The easiest and best way to keep a personal loan from lowering your credit score is to make your payments on time and within the tenure of the loan stated.

What is an EMI?

What is an EMI?

 An EMI is one of the first things that comes to your mind when you think of Loans, be it personal, business, vehicle, marriage, home, or business. However, before we proceed with EMI, note on one of the best loan aggregators in India, Buddy Loan is disbursing instant personalloans at a faster rate and with lower interest rates starting at 11.99%p.a. Their repayment options are better than ever and help you get an EMI option based out of your convenience and capability.  

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 EMI Acronym 

• EMI stands for Equated Monthly Instalments, which as the name itself suggests it is the amount that you pay back your lender every month on a fixed date. 
• EMI will be calculated based on main factors like Loan Amount taken, Tenure and Interest rate.
• Tenure is nothing but the time taken to clear the loan, more the tenure period, EMI will be less and vice versa. But the interest amount will increase in such case of long tenure.
• Interest will be calculated by the lender based on your Income, Previous credits, Market situations, Repayment capacity, etc.

 

Now that we have understood what EMI is, let us see the types of loans

1. Arrears EMI
2. Advance EMI

 

• Arrears EMI – Arrears EMI is also known as standard EMI where you pay the EMI at a fixed date every month until the tenure gets over to repay the complete Loan amount.

 

In this case, the lenders like Buddy Loan disburses the Requested loan amount (Principal amount) minus the processing fee of the Bank or that of any lender.

 

• Advance EMI – In this case, you pay the first EMI well in advance at the time of down payment. Hence the lender disburses the Requested loan amount (Principal amount) minus the processing fee of the Bank and minus the first EMI amount.  

 

This amount will be considered as the principal amount itself without any interest, thus reducing the principal amount borrowed. 

 

E.g.: You want to borrow ₹50,000 from Buddy Loan for your new favourite Mobile of ₹70,000 with a tenure of 1 year (12M)

PS you can easily calculate the EMI amount using any online EMI calculators.  

 

 PS you can easily calculate the EMI amount using any online EMI calculators

	Arrears EMI	Advance EMI
EMI Amount	₹4442	₹4398
Disbursal amount	₹49000 (50000-1000)	₹44602 (50000-1000-4398)
Down payment	₹21000 (70000-49000)	₹25398 (70000-44602)
Total Amount payable	₹74304 (21000+4442*12)	₹73776 (25398+4398*11)

 

Now you know which option to choose when you are applying for a loan. It is advised to choose Advance EMI if you can afford to pay one EMI along with the down payment. Else you can always choose Arrears EMI.

To apply for a loan, click https://www.buddyloan.in/

Conclusion

To add more benefits and enhance your credit score, preplanning your finances helps you reach and safe in the journey. EMI calculator not just helps you with the calculation but give you an introspective idea so that you can correlate you spends and loan repayment, savings and livelihood. 

How is EMI calculated on my business loan at Buddy Loan?

The EMI on your business loan is the amount you will be paying monthly to your loan lender.
This amount is computed to include the interest and the principal amount. You pay steadily fixed
EMIs for the tenure of the loan, progressively, reducing the amount of money you owe the bank.
The bank may choose to calculate the EMI using the reducing balance method or the flat rate
method. `

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However, loan aggregators help you with the best repayment options for a good 5 years.
Explore Buddy Loan in order to reap more benefit for a Instant business loan online. Meaning more benefits on tax.
Factors that affect the size of your EMI
Change in loan tenure: When your loan tenure is changed, even by a month, it changes the size
of EMI. When you want a smaller EMI amount, the tenure is elongated. However, the longer the
tenure, the higher the interest rate.
Higher EMI amounts result in a shorter tenure and lower interest rate.
Prepayment of the firsts EMI
When you pay the first EMI in advance, it reduces the size of the principal that you owe the
bank. Therefore, as a result, your consecutive EMI amounts will be reduced.
Shifting your loan to a different lender:
Different lenders have different interest rates, and therefore, the amount of EMI will vary. When
you transfer your business loan to a different lender, then your payment changes.
Flat rate method
Principal amount+ interest on the principal = EMI
Number of periods* number of months

Reducing balance Method 1
The mathematical formula to calculate EMI
P*R*(1+R)^N = EMI
[(1+R)^n-1
P =principal amount
R =The rate of interest
N = Number of repayment periods
Method 2
Using an excel worksheet
Using the same variables but the function
PMT=Rate* number of repayment periods* amount of loan
Method 3
Use an online calculator. If you are applying for an online loan, most providers will have an
online calculator where you key in the variables and compute your EMI.
The bank computes the interest you pay using two methods. These are:
• Simple interest. This type of investment is calculated only on the amount of loan given
out.
Principal* interest rate * the Number of repayment periods.
• Compound interest: In this method, the interest is added back to the amount borrowed
for you to calculate the next year's interest
Principal*interest rate= interest for year 1
Principal interest for year 1) * interest rate = interest for year 2
Factors affecting your business loan interest rate
 Amount of interest paid depends on the prevailing bank interest rates
 Your credit score matters a lot
 Late payments cause an increase in your interest rate
 The terms of loan affect the interest rate
 The interest rate is the price you have to pay
These factors will, in turn, affect your EMI. Therefore, it is paramount to be keen on each
element as you apply for your business loan.