Understand your loan
How a Personal Loan EMI is calculated
Personal loans are unsecured, so they carry the highest interest rates — usually 10% to 24% per annum — and shorter tenures of 1 to 5 years. The EMI maths is identical, but the higher rate makes total interest add up quickly.
What is an EMI?
On a personal loan, the EMI (Equated Monthly Instalment) is the fixed monthly repayment on an unsecured loan, usually over 1 to 5 years. With no collateral backing it, rates are the highest of the three loan types — typically 10% to 24% — so the interest portion of each EMI builds up quickly relative to the principal.
The EMI formula
Banks and NBFCs in India use the reducing-balance method. The standard formula is:
Over a short 1-to-5-year term the principal clears quickly, but at 10–24% the total interest is heavy relative to the amount borrowed. That makes two habits worth far more than on a cheaper loan: borrow only what you genuinely need, and pick the shortest tenure your budget can carry.
Example EMI calculations (India)
Worked personal-loan examples at the higher rates and 3–5 year tenures typical for unsecured loans in India. Adjust the calculator at the top for your amount and rate. Illustrative rates as of June 2026, not live lender quotes.
| Loan type | Amount | Rate (p.a.) | Tenure | Monthly EMI | Total interest | Total payable |
|---|---|---|---|---|---|---|
| Personal Loan | ₹2,00,000 | 14% | 3 years | ₹6,836 | ₹46,079 | ₹2,46,079 |
| Personal Loan | ₹5,00,000 | 14% | 5 years | ₹11,634 | ₹1,98,048 | ₹6,98,048 |
| Personal Loan | ₹3,00,000 | 16% | 4 years | ₹8,502 | ₹1,08,100 | ₹4,08,100 |
| Personal Loan | ₹10,00,000 | 12% | 5 years | ₹22,244 | ₹3,34,667 | ₹13,34,667 |
Tips to keep your EMI affordable
- Borrow only what you need — the rate is high, so every extra rupee costs more.
- Prefer the shortest tenure your budget allows to minimise total interest.
- Check the APR including processing fees, not just the headline rate.
- A strong credit score and stable income can unlock noticeably lower rates.
Personal loan specifics in India
Because a personal loan is unsecured, the headline rate hides part of the real cost:
- Reducing vs flat rate: always compare on the reducing-balance rate or APR — a 10% flat rate is roughly an 18% reducing rate. See flat vs reducing balance.
- Processing fees: 1–3% + GST is deducted upfront, so you receive less than you borrow while paying EMIs on the full amount — pushing the real APR above the advertised rate.
- Eligibility: lenders want stable income (often ₹15,000–₹25,000+ net), a CIBIL score around 750+, and total EMIs under ~50% of income (FOIR) — see personal loan eligibility.
- Foreclosure: closing early usually costs 2–5% of the outstanding balance, but at these rates prepaying can still save money.
Note: This calculator gives an estimate using a fixed interest rate. Actual EMIs may vary with processing fees, GST on charges, floating-rate revisions and your lender's specific terms.