Personal Loan EMI
Key takeaways
- Every ₹100 borrowed costs ₹139.61 to repay over 5 years — ₹100 of principal plus ₹39.61 of interest at 14%.
- The balance falls below half the loan only in month 36 (year 3 of 5) — early EMIs are interest-heavy.
- Over 3 years instead of 5, total interest drops ₹82,850 to ₹1.15 L — while the EMI rises to ₹17,088.81 from ₹11,634.13.
Payment schedule
| Year | Principal | Interest | Balance |
|---|---|---|---|
| 1 | ₹74,254 | ₹65,355 | ₹4.26 L |
| 2 | ₹85,344 | ₹54,266 | ₹3.40 L |
| 3 | ₹98,089 | ₹41,520 | ₹2.42 L |
| 4 | ₹1.13 L | ₹26,871 | ₹1.30 L |
| 5 | ₹1.30 L | ₹10,035 | ₹0 |
About the Personal Loan EMI
A personal loan is unsecured: it is not backed by any asset the lender can repossess, and it is not tied to a specific purchase. Lenders price that extra risk into the rate, so personal loan rates typically run several percentage points above a home or car loan from the same lender, and approval rests on income and credit history rather than collateral.
This calculator works out the fixed monthly instalment using the reducing-balance method bank EMI loans are priced on — the same amount each month, split between interest and principal in a proportion that shifts over the tenure. A lender quoting a flat rate charges interest on the original amount for the whole tenure instead, which costs more at the same headline rate. Personal loan tenures usually run one to seven years, which is the range this calculator covers.
Frequently asked questions
How is personal loan EMI calculated?
With the reducing-balance formula: EMI = P × i × (1 + i)ⁿ ÷ [(1 + i)ⁿ − 1], where P is the loan amount, i is the monthly rate (annual rate ÷ 1200) and n is the tenure in months. Interest is charged only on the outstanding balance, so the interest share of each EMI falls as the loan runs down.
Why are personal loan rates higher than home or car loan rates?
Because nothing secures them. A home or car loan is backed by an asset the lender can take and sell if repayment stops; a personal loan is not, so the lender carries the full loss on a default and prices for it. Rate offers also vary widely by credit score and income stability.
Does a longer personal loan tenure cost more?
A longer tenure lowers the monthly EMI and raises the total interest, because interest accrues for more months on a balance that falls more slowly. This calculator shows both figures at once, so the trade-off is visible rather than assumed.
What charges apply besides the interest?
Most lenders add a one-time processing fee (commonly 0.5–3% of the loan) and may charge for prepayment or foreclosure on a fixed-rate loan. GST applies to those fees. None of them are in the EMI figure here, so read the sanction letter's schedule of charges alongside it.
Can a personal loan be prepaid?
Usually, subject to the lender's terms and any foreclosure charge. A prepayment goes straight to the outstanding principal, which reduces the interest that would otherwise accrue on it — the Loan Prepayment calculator on this site quantifies that for a given lump sum.
Disclaimer: This calculator is for information and education only. It is not investment advice and not a recommendation, and it is not a loan offer. The lender decides the actual interest rate, EMI, fees and eligibility, and whether insurance cover is required, and a floating rate can change during the loan. Charges you did not enter are not included. Every figure is computed solely by applying the formula and assumptions stated on this page to the inputs you entered.