How is personal loan EMI calculated?

Personal loan EMI uses the reducing-balance formula: EMI = P × r × (1+r)^n ÷ ((1+r)^n − 1), where P is the loan amount, r the monthly interest rate and n the number of months. Interest is charged only on the outstanding balance each month.

What is the processing fee on a personal loan?

Lenders charge a one-time processing fee, usually 1–3% of the loan amount plus GST, often deducted upfront. So the amount credited to your account is the loan minus this fee, even though you repay EMIs on the full loan. It's a real cost worth counting.

Why is the personal loan interest rate so high?

A personal loan is unsecured — there's no asset backing it — so lenders price in more risk, typically 10.5–24% depending on your income, employer and credit score. A strong credit score gets you the lower end of that range.

Personal Loan EMI Calculator (India)

How it's calculated

The EMI is computed on a reducing balance from your loan amount, rate and tenure — interest each month is charged only on what's still outstanding. Because a personal loan is unsecured, the processing fee matters: it's deducted upfront, so you repay EMIs on the full loan while receiving the loan minus the fee. The true cost of borrowing is the total interest plus that fee.

EMI = P × r × (1+r)^n ÷ ((1+r)^n − 1). Processing fee is a percentage of the loan (GST extra in practice). A shorter tenure means a higher EMI but much less interest.

Frequently asked questions

Can I prepay or foreclose a personal loan?

Usually yes, after a few EMIs, though many lenders charge a foreclosure fee of a few per cent on the outstanding. Read the sanction letter before you sign.

Does a longer tenure help?

It lowers the EMI but raises the total interest sharply at these rates. Borrow for the shortest tenure your budget can handle.

Is a personal loan cheaper than a credit card?

Almost always. Credit-card revolving interest runs much higher, so consolidating card dues into a personal loan often reduces the cost — compare with the other EMI tools for secured options too.

Personal Loan EMI Calculator

Your personal loan

How it's calculated

Frequently asked questions