Personal Loan EMI Calculator

The rate on a personal loan offer is not what the loan costs. The processing fee comes out before the money reaches your account, so you repay instalments worked out on the full sanctioned amount while having received less than that — borrow five lakh at 14% with a 2% fee and about 4.88 lakh actually arrives, which makes the real rate closer to 15.7%. Nobody quotes that figure, so this page works it out. It also prices clearing the loan early, because personal loans are the ones people most want to settle ahead of time and the ones most likely to charge for it.

How to use it

1. Enter the amount, the rate you have been quoted and the tenure.
2. Add the processing fee and any tax charged on it. Both are deducted before disbursement.
3. Read the effective rate. That is what you are paying on the money that actually reached you.
4. To price an early exit, enter the month you might settle in and the foreclosure charge from your agreement.

Examples

• 5 lakh at 14% over 3 years: 17,089 a month, 4.88 lakh received, and a real rate of 15.69%
• Settling that loan at month 18 costs 2.76 lakh outstanding plus an 11,040 charge, and saves about 20,555 overall

Frequently asked questions

Why is the personal loan interest rate so much higher?

Because there is nothing behind it. A home loan is secured on the house and a car loan on the car, so if you stop paying the lender has something to recover. A personal loan is unsecured — the lender has only your promise and your credit history — and the rate carries that risk for everyone who borrows, including the people who repay reliably. It is also why the tenure is short: the longer an unsecured loan runs, the more can go wrong, so lenders cap it at a few years rather than the decades a mortgage runs.

What is the processing fee and why does it raise the real rate?

It is a one-off charge for arranging the loan, usually 1 to 3% of the amount, and in most markets it is deducted from the disbursement rather than billed separately. That is what makes it more expensive than it looks. Your instalments are calculated on the full sanctioned figure, but you only ever received the amount left after the fee and any tax on it. On five lakh at 14% over three years, a 2% fee plus 18% GST means 4.88 lakh reaches you while you repay as though you had five lakh — an effective rate of 15.69% rather than 14%. Always compare offers on the effective rate, not the headline one.

Can I foreclose a personal loan early?

Usually yes, and usually not for free. Most agreements allow foreclosure after a lock-in of six to twelve months and then charge a percentage of the outstanding balance, commonly 2 to 5%. Whether it is worth it depends on how early you are: settling in the first half of the term saves a good deal of interest even after the charge, while settling near the end saves little because most of the interest has already been paid. Enter the month above and the page prices it both ways. Note that regulators in several markets have restricted these charges on floating-rate loans to individuals, so check whether yours qualifies.

Is a personal loan cheaper than credit card EMI?

Very often yes, though it depends on the offer. Card EMI conversion typically runs 13 to 18% a year plus a conversion fee, and the rate is applied in ways that are harder to compare than a straight loan. A personal loan at 12 to 14% with a single processing fee is usually the cheaper of the two for anything you will take more than a few months to repay. The exception is a genuine no-cost EMI on a specific purchase, where the merchant absorbs the interest — that is cheaper than any loan, provided the discount you gave up to get it was not larger. Our credit card EMI calculator prices that comparison directly.

What EMI can I actually afford?

Lenders will let you borrow up to roughly half your take-home pay across all instalments together, and that ceiling is a limit rather than a target. The more useful question is what you could still pay if your income stopped for three months, because an unsecured loan does not care why you missed it. A reasonable working figure is that a personal loan instalment should sit under a fifth of take-home pay, leaving room for the rent, the existing commitments and the emergency that prompted the loan in the first place. Our loan eligibility calculator works the ceiling out from your income.

Does a personal loan affect my credit score?

Yes, in both directions. Applying generates a hard enquiry, and several applications in a short window read as distress, so it is worth checking eligibility before applying rather than applying widely to compare. Once taken, the loan adds to your total debt and lowers your score slightly at first — then repaying it on time for a year or two raises it, because a settled unsecured loan is good evidence of reliability. A missed instalment does disproportionate damage and stays on the record for years, which is the strongest argument for choosing an instalment you can comfortably rather than barely afford.