Personal Loan Affordability Calculator

Loan Affordability Calculator

The loan affordability calculator helps you calculate how much loan you can afford. Loan affordability depends upon how much EMI one can afford towards loan repayment. Income of the borrower is the key criterion that forms the basis of loan affordability and determining the loan amount. Complete income record of the borrowers income is examined by the lenders while processing his application and this includes past income, regular income and income from part time activities. Most lenders use an average rule of thumb to determine loan affordability. On average, your monthly home loan repayments should not exceed 40% of your gross monthly income to calculate an affordable repayment amount. This ensures that you maintain your lifestyle and still afford the loan repayments, in case, interest rates rise. If you save little and spend a high percentage of your income, you could struggle with taking on a hefty home loan and you might need to curb your spending. This calculator can be used for any type of loans including home loan, personal loan, car loan etc. It will help you assess the impact of increasing /decreasing EMI on the loan amount. Similarly, by increasing or decreasing the repayment period (loan tenure), you can see the effect on the maximum amount you can borrow. Suppose after entering all the inputs, if the loan amount comes out to be less than the loan amount you require, you can increase the loan tenure or increase the EMI and arrive at an optimum combination. This calculator doesn't tell you if you will qualify for the loan. Qualification depends upon many factors including your credit rating. Assumptions:

• The interest rate remains fixed during the loan tenure
• Interest rate is compounded monthly
• Processing & other charges which may applicable as per the rules of banks and other lending institutions are not taken into account.

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