Personal loan EMI calculator
EMI for an unsecured personal loan over 1 to 5 years, the interest at the rates these loans carry, and how to compare a bank's offer with an app lender's.
Type the amount, the rate on the offer and the tenure.
Why personal loans cost more
A personal loan is unsecured: there is no house or vehicle for the lender to take if you stop paying, so the rate covers that risk and depends heavily on your credit score and your employer. The EMI arithmetic is the standard reducing-balance formula (explained on the general EMI calculator); what changes is that at these rates the interest is a large share of every instalment even on a short loan, and that the difference between one lender's rate and another's is often several percentage points on the same borrower.
Worked example
Rs 3,00,000 at 14% for 3 years: the EMI is Rs 10,253 and the total interest Rs 69,118. Stretch it to 5 years and the EMI falls to Rs 6,980 but the interest rises to Rs 1,18,829. Take the same 3-year loan from an app lender at 24% and the EMI is Rs 11,770 with Rs 1,23,715 of interest, nearly double the interest for the same money. The rate is the whole story with a personal loan; the tenure only decides how fast you feel it.
Reading the offer
- Ask for the annual percentage rate including the processing fee. A 2% fee deducted up front on a one-year loan adds roughly 4 percentage points to the true rate, because you pay interest on money you never received.
- "Flat rate" offers exist here too; a flat 10% over two years is about 18% reducing. Type their EMI and amount into the calculator and adjust the rate until it matches.
- Pre-closure charges on personal loans are common and can be a few percent of the outstanding amount. If you expect a bonus or a maturing deposit, ask for the charge before you sign, or choose a lender who does not levy one.
- Insurance sold with the loan, sometimes financed into it, raises the amount and the EMI. You can decline it.
- Instant app loans of a few thousand rupees quote rates per month or per week; convert to a yearly rate before comparing. Three percent a month is not 3%, it is about 43% a year with compounding.
Alternatives worth pricing first
A loan against a fixed deposit, gold, or an insurance policy is secured and therefore cheaper, and an employer advance may be interest-free. If the personal loan is to pay off credit-card dues, it is almost always a good trade, because card interest is higher still; run the card's rate through this calculator to see.