Personal Loan EMI Calculator

What this personal loan calculator tells you

A personal loan is usually unsecured: you do not pledge a house, a car or gold, so the lender prices the risk into the rate and keeps the tenure short, often between one and five years. Two numbers decide what the loan costs you. The first is the EMI, which is fixed for the whole tenure on a regular reducing balance loan. The second is the processing fee, which many lenders take out of the amount before it reaches your account. This calculator shows both, and then works out the rate you are effectively paying on the money you actually receive.

How to use it

1. Enter the loan amount you have been offered.
2. Enter the yearly interest rate from the sanction letter.
3. Choose the tenure, in years or in months. Switching the unit converts the value for you.
4. Enter the processing fee as a percentage of the loan. Use 0 if there is none.

The EMI, total interest, fee and effective rate update as you type, and the table below the chart shows how much of each year's EMIs goes to principal and how much to interest.

The formula

The monthly instalment is EMI = P x r x (1 + r)^n / ((1 + r)^n - 1), where P is the loan amount, r is the yearly rate divided by 12 and by 100, and n is the number of months. Total interest is EMI x n minus P. The fee is P x fee % / 100. For the effective rate, the calculator finds the monthly rate at which the amount you receive (P minus the fee) is exactly repaid by the same n EMIs, and multiplies it by 12 so you can compare it directly with the rate the lender quoted.

A worked example

Take a loan of ₹5,00,000 at 12% a year for 3 years (36 months) with a 2% processing fee. The monthly rate is 1%, so the EMI comes to ₹16,607. Over 36 months you pay ₹5,97,858 in EMIs, which is ₹97,858 of interest. The fee is ₹10,000, so ₹4,90,000 reaches your bank account. Interest plus fee adds up to ₹1,07,858. Because you repay the full ₹5,97,858 on only ₹4,90,000 received, the effective rate is about 13.41% a year, not 12%. In the first year you pay ₹52,078 of interest and the balance falls to ₹3,52,792; by the third year interest is down to ₹12,371.

Why short tenures matter here

Because personal loan rates are higher than secured loan rates, every extra year of tenure adds a lot of interest. Stretching the same ₹5,00,000 at 12% from 3 years to 5 lowers the EMI, but you pay interest on a larger balance for longer. A flat fee also hurts more on a short loan: the 2% above adds well over one percentage point to the effective rate over 3 years, and less over a longer term because it is spread across more months.

Assumptions and limits

• The rate is fixed and interest is charged monthly on the reducing balance, which is how a standard EMI works. Flat rate offers are not modelled.
• The fee is treated as deducted at the start. Some lenders also charge tax on the fee, insurance, or stamp duty; add those to the fee percentage if you want them in the effective rate.
• Late payment charges, foreclosure charges and broken period interest before the first EMI are not included.
• Results are rounded to the rupee on screen. Your lender's schedule may differ by a few rupees because of its own rounding.