Calculate your personal loan EMI — and see what it really costs.
Personal loans are the most expensive type of retail credit. Before you sign, see the EMI, total interest, and amortization schedule so you know exactly what you're committing to.
What this loan really looks like
The lifetime split is only part of the story. These show how the principal/interest mix shifts year by year, how slowly the balance falls, and the month your payment finally tips toward principal.
Amortization schedule
See how each payment splits between principal and interest, and how your balance reduces over time.
| Year | Principal paid | Interest paid | Total payment | Balance |
|---|
About personal loan EMIs
Personal loans are unsecured, which is why they're expensive. Know what you're signing up for before you do.
Expect 11-24%
Personal loan rates in India start around 11% for prime borrowers and climb to 24% for less-creditworthy applicants. Compare your offer to the bank's published rate — if you're getting 4%+ above prime, your CIBIL score is the issue.
Typically 1-5 years
Banks rarely offer personal loans beyond 5 years. Longer tenure means a smaller monthly EMI but significantly more total interest — sometimes 30%+ of the loan amount.
Often 1-3% upfront
A 2% processing fee on a ₹5 lakh loan is ₹10,000 deducted from disbursal. Factor this into your effective interest rate — it can add 0.5-1% to the real cost over a short tenure.
With one exception
Personal loan interest isn't deductible — except when the loan is used for: (a) home purchase/renovation (then Section 24/80C may apply), (b) business purposes (claim as expense), or (c) higher education (Section 80E).
Floating-rate: free
Floating-rate personal loans cannot have prepayment penalties (RBI rule for individual borrowers). Fixed-rate loans may charge 3-5% foreclosure fees. Check the loan agreement before signing.
Cheaper options exist
Before taking a personal loan, consider: top-up on existing home loan (rates 1-2% lower, tax-deductible), loan against fixed deposit (rate = FD rate + 1-2%), gold loan (8-12% rates), or loan against shares/mutual funds (8-10% rates).
Frequently asked questions
At 12.5% per annum for a 4-year tenure, the EMI is approximately ₹13,287 per month. Over 4 years, total interest comes to about ₹1.38 lakh — meaning the loan effectively costs ₹6.38 lakh.
If you can get the same loan at 11%, EMI drops to ₹12,920 and total interest to ₹1.20 lakh. If you stretch the tenure to 5 years at 12.5%, EMI drops to ₹11,250 but total interest jumps to ₹1.75 lakh. Shorter tenure = cheaper overall, even if EMI is higher.
Personal loans are unsecured — there's no collateral the lender can claim if you default. That risk gets priced in. Home loans (secured by property) are cheapest at 8-9%, car loans (secured by car) at 9-11%, personal loans (unsecured) at 11-18%, credit cards (also unsecured but more revolving) at 36-42%.
The interest rate reflects the lender's expected losses from defaults. The lower your credit score, the higher the perceived risk, the higher your rate.
Personal loans typically use the same EMI formula as other loans: EMI = P × r × (1+r)ⁿ / ((1+r)ⁿ − 1), where P is the principal, r is the monthly interest rate, and n is the tenure in months.
The bank charges interest on the reducing balance — meaning interest is calculated on the outstanding principal each month, not on the original loan amount. This is the standard method. Some lenders advertise a "flat rate" which is actually higher in effective terms — always ask for the reducing-balance rate to compare apples to apples.
Often yes. Credit card interest is 36-42% per annum. Personal loan interest is 11-18%. Transferring a ₹2 lakh credit card balance to a 3-year personal loan at 13% saves roughly ₹50,000-70,000 in interest compared to making minimum payments on the credit card.
Two caveats: (1) only do this if you have the discipline to NOT run up the credit card again, and (2) compare against a balance transfer offer from the credit card itself — sometimes 0% promotional rates are available for 3-6 months.
Below 650: very difficult; expect rejection from most major banks. NBFCs may offer loans but at very high rates (20-24%).
650-700: possible but rates will be on the higher end (15-18%).
700-750: most banks will approve at standard rates (13-15%).
Above 750: best rates available (11-13%) and easy approval.
If your score is below 700, work on improving it for 6-12 months before applying — the rate difference will save you significant money over the loan tenure. Ways to improve: pay all dues on time, reduce credit utilization below 30%, don't apply for multiple loans simultaneously.