How to Calculate Home And Car Loan Costs When Interest Rates Are Rising


What is the cost of loans during rising interest rates? Read

Globally, near-decade-high inflation has resulted in aggressive interest rate hikes by major central banks this year to bring price pressures under control.

India has not been an exception. At its most recent meeting, the Reserve Bank of India hiked its key repo rate by 35 basis points to 6.25 per cent, the highest since April 2019.

That comes after a hike of 40 basis points in May and 50 basis points each in June, August and September, making the latest the fifth consecutive hike.

While the December rate hike is only a smaller one, it will still have a significant negative impact on household budgets that are already pushed thin due to increased borrowing expenses and an increase in the cost of nearly everything.

Like in recent months, Indian banks have promptly passed on the RBI rate increase to consumers, increasing lending costs and equated monthly installments (EMIs).

So in this scenario of rising interest rates, here’s how you can calculate your loan cost.

Whatever the requirement, one can use NDTV’s free and easy-to-use online calculators to get an idea of your loans’ cost and EMIs under the NDTV Tools page.

If one is planning to buy a new home, then the NDTV Home Loan Calculator comes in handy to understand the monthly payout in a few clicks.

Similarly, the Personal Loan Calculator and the Car Loan Calculator can help one with loan costs.

Factors To Keep In Mind Before Applying For A Loan During A Rising Interest Rates Cycle:

When preparing to apply for a loan, remember a few things. You will need to determine equal monthly instalments based on your financial situation and ability to repay the loan (EMI). Here are some things to think about:

What Is The Term Of The Loan:

Lenders usually increase the length of a loan repayment tenure or the EMI, and both in some cases, when interest rates are rising. So, there will then be a change in the EMI amount. 

As a result, considering a loan’s length is another crucial consideration that could impact the amount you owe.

Interest Rate Offered:

Best to understand and compare the interest rates offered by various lenders to ensure one gets the most competitive cost for borrowing. So, one can study this comparison using the NDTV Free Online Calculators easily.

What Is The Loan Amount:

The total loan one is looking to borrow plays an important aspect in the repayment amount, including the interest.

How much to borrow is a common dilemma one faces before applying for a loan, as lenders offer multiple schemes, including larger loans, ahead of the year-end.

Irrespective of what kind of loan you intend to get – a secured or unsecured advance – it is critical that you understand how much of a monthly payment you will have to make before you apply for it. In this situation, an EMI calculator can be of great use.

Using the  NDTV Free Online Calculators to understand the repayment amount, including EMIs, to lower your financial burden helps you make this decision.

The NDTV Tools page offers more than just financial calculators. The NDTV Tools page provides various online tools to handle common, challenging activities, such as estimating loan EMIs, monitoring fuel prices, and more.

Also see: Love Road Trips? Here’s How You Can Calculate The Cost Of Fuel

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