What is the difference between a flat rate and a reducing balance rate?

In the flat rate method, interest is charged on the full original principal for the entire tenure, which makes the real cost of the loan much higher than the quoted rate suggests. In the reducing balance method, interest is charged only on the outstanding principal, which falls every month. Every bank and NBFC in India uses the reducing balance method for EMI-based personal, home, and car loans.

Does prepayment actually save interest on a loan?

Yes. Prepayment reduces your outstanding principal immediately, which cuts the interest charged on every EMI after that point. On a floating-rate loan, RBI rules bar lenders from charging a prepayment penalty. On a fixed-rate personal loan, lenders can still charge a penalty of roughly 2 to 5 percent of the prepaid amount, so check your loan agreement before prepaying.

What is a loan moratorium and how does it affect my EMI?

A moratorium is an agreed period during which you do not pay any EMI, usually granted during construction of a property or the study period of an education loan. Interest still accrues during this window and gets added to your principal, so your EMI after the moratorium ends is higher than if repayment had started immediately. Use the advanced settings in this calculator to see the exact EMI increase for your loan.

What happens if I miss an EMI payment?

Missing an EMI attracts a late payment fee, a penal charge on the overdue amount, and a negative mark on your credit report that most lenders can see within 30 to 45 days. If EMIs are missed for 90 days in a row, the loan is classified as a Non-Performing Asset and the lender can start legal recovery. Setting up auto-debit from your salary account is the simplest way to avoid this.

Can I change my loan tenure after taking the loan?

Most lenders allow tenure changes through a loan restructuring request. Extending the tenure lowers your EMI but raises total interest paid. Shortening the tenure raises your EMI but cuts total interest. Some lenders charge a nominal restructuring fee, and a tenure change usually triggers a fresh credit check.

What credit score do I need for a loan?

A CIBIL score of 750 or above gets you the best rates from nearly every lender in India. Scores between 700 and 749 usually still get approved, but at a higher interest rate. Below 700, approval becomes difficult with banks and you may need to look at NBFCs, which charge more. Paying every EMI on time is the single biggest factor in keeping your score above 750.

How much loan can I get based on my salary?

Most Indian lenders use FOIR, the Fixed Obligation to Income Ratio, and cap all your EMIs combined at 40 to 50 percent of gross monthly income. On a salary of Rs 80,000 with no existing EMIs, a lender working with a 40 percent FOIR would allow a total EMI of up to Rs 32,000. The exact figure depends on your income, existing loans, interest rate, and tenure, which the loan eligibility calculator checks directly.

What is a top-up loan?

A top-up loan is additional credit sanctioned over an existing loan, usually a home loan, once you have built up repayment history and the property value has appreciated. Because it rides on an existing secured loan, the interest rate on a top-up is typically lower than a fresh personal loan, and disbursal is faster since the lender already has your documents on file.

What documents are needed for a loan application?

Salaried applicants typically need PAN, Aadhaar, the last three months of salary slips, six months of bank statements, and Form 16. Self-employed applicants need two to three years of ITR filings, profit and loss statements, and business bank statements. Secured loans such as home or car loans additionally need property or vehicle documents.

How does loan processing fee affect the total cost?

Processing fee is a one-time charge, usually 0.5 to 2.5 percent of the loan amount, deducted upfront or added to the loan. It does not change your EMI but it does raise the effective cost of borrowing. This calculator adds processing fee to the total amount payable so you see the real cost of the loan, not just the EMI and interest.

What is the maximum loan tenure for a personal loan?

Personal loan tenure in India typically ranges from 12 to 60 months, with a handful of lenders going up to 84 months. Home loans go up to 30 years and car loans up to 7 years. A longer tenure lowers the EMI but increases total interest paid, so tenure should be chosen based on what EMI fits your monthly budget, not the lowest number on offer.

Fermor is a financial platform for India that combines calculator tools, an eligibility engine, and a CA portal to help people move from a financial question to a decision they can act on. The calculators, including this loan calculator, are free to use and show you exactly what a loan will cost before you apply. A free account lets you save your calculations, and the CA portal at ca.fermor.in lets chartered accountants generate tax optimization reports for their clients.

Loan Calculator: EMI, Interest and Repayment Schedule

What Is a Loan?

A loan is a sum of money borrowed from a bank or NBFC that you repay with interest over a fixed tenure, usually through equal monthly instalments (EMI).

Personal loans, home loans, car loans, education loans, and loans against property are the common credit products in India. Each carries a different interest rate range, tenure, and eligibility bar set by the lender.

Personal loans are unsecured, so no collateral is required and the lender relies entirely on your credit score, income, and repayment history. That is why personal loan rates run higher than secured loans such as a home or car loan.

How This Loan Calculator Helps You

This calculator gives you the full financial picture of a loan before you sign for it, not just a single EMI number.

•Get an accurate EMI, including processing fee, so you know the true monthly cost before you apply.

•Model an extra monthly payment to see the exact interest you save and the months you cut off your tenure.

•Model a moratorium period to see how much your EMI rises once repayment actually starts.

•View a year-by-year amortization schedule that shows exactly how your outstanding balance falls over time.

Loan EMI Formula

Every EMI-based loan in India uses the same reducing-balance formula, regardless of lender or loan type.

EMI = [P x R x (1+R)^N] / [(1+R)^N - 1]

Variables used in the EMI formula.
Symbol	Meaning
P	Principal loan amount
R	Monthly interest rate (annual rate divided by 12 divided by 100)
N	Number of monthly instalments (tenure in months)

On a Rs 5,00,000 loan at 11% for 60 months, the formula gives an EMI of about Rs 10,873, with total interest of roughly Rs 1,52,380 over the full tenure. Change any input in the calculator above to see the same formula applied to your own numbers.

Loan EMI Formula in Excel

Excel has a built-in PMT function that calculates EMI in one step, without writing out the full reducing-balance formula.

Three ways to calculate EMI in Excel or Google Sheets.
Method	Formula	Result (5L, 11%, 60mo)
PMT function	=PMT(11%/12, 60, -500000)	₹10,871
Manual formula	=(PR(1+R)^N)/((1+R)^N-1)	₹10,871
RATE-based check	=RATE(60, -EMI, 500000)*12	11.00%

Reverse Loan Calculator: Find Loan Amount From EMI

If you already know the EMI you can afford, you can work backward to the maximum loan amount using the same formula rearranged for P.

P = EMI x [(1+R)^N - 1] / [R x (1+R)^N]

For example, if you can comfortably pay Rs 15,000 a month at 11% for 60 months, you can borrow roughly Rs 6.9 lakh. Use the Loan Eligibility Calculator to check this against your actual income and existing EMIs.

Flat Rate vs Reducing Balance Interest

A flat rate loan charges interest on the full original principal for the entire tenure, while a reducing balance loan charges interest only on what you still owe.

Same loan, two interest methods, on Rs 5,00,000 at a quoted 11% for 5 years.
Method	Effective Rate	Total Interest
Flat rate	~20.4% effective	₹2,75,000
Reducing balance	11.0% effective	₹1,52,273

Always ask a lender whether a quoted rate is flat or reducing balance. A flat rate that sounds lower than a competitor's reducing balance rate can end up costing more in total interest.

Types of Loan EMI Calculators in India

Each loan type has its own eligibility rules and typical rate range, so it helps to use a calculator built for that specific loan once you know which one you need.

Home Loan EMI

Home loans carry the lowest rates of any retail loan since the property is collateral, and tenure can run up to 30 years. Use the Home Loan Calculator for property-specific inputs like down payment.

Car Loan EMI

Car loans are secured against the vehicle, with tenures of 1 to 7 years. Try the Car Loan EMI Calculator for a vehicle-specific breakdown.

Personal Loan EMI

Personal loans are unsecured and carry the highest rates of the three, typically 10% to 24% depending on credit score. The Personal Loan EMI Calculator adds income-based eligibility checks.

Education Loan EMI

Education loans almost always include a moratorium covering the course duration plus 6 to 12 months. The Education Loan EMI Calculator is built specifically around that moratorium structure.

Loan Eligibility Calculator

Check exactly how much loan you qualify for based on income, FOIR, and existing EMIs.

Open calculator

Loan Repayment Schedule and Amortization

An amortization schedule shows how each EMI splits between principal and interest across the life of the loan. In the early years, most of your EMI goes toward interest because the outstanding balance is at its highest.

On a 60-month loan at 11%, roughly 46% of the first EMI is interest, and that share falls to under 10% by the final year. The amortization panel above the calculator card shows this exact breakdown for your own inputs, with a bar chart and a year-by-year table.

Loan Prepayment and Foreclosure: How Much You Can Save

Prepayment means paying more than your scheduled EMI to reduce the outstanding principal faster, and it directly cuts the total interest you pay. Open More settings above and add an extra monthly payment to see your exact interest saved and tenure reduction.

Under RBI rules, banks and NBFCs cannot charge a prepayment penalty on floating-rate loans taken by individual borrowers. This applies to home loans, car loans, and most personal loans, though some fixed-rate personal loans still carry a 2 to 5 percent charge on the prepaid amount.

Foreclosure means paying off the entire remaining balance in one go rather than an extra monthly amount. The Loan Prepayment Calculator handles both a lump-sum foreclosure and a recurring extra payment in one view.

Loan Prepayment Calculator

Compare a lump-sum foreclosure against a recurring extra EMI to see which saves you more.

Open calculator

What Is a Loan Moratorium and How EMI Changes After It

A loan moratorium is an agreed window, usually 6 to 24 months, during which you make no EMI payments at all. It is standard on education loans for the course duration and common on under-construction home loans until possession.

Interest keeps accruing during the moratorium and is added to your principal once it ends, so the loan you actually start repaying is larger than the amount you borrowed. Open More settings above and set a moratorium period to see the exact capitalized interest and the higher post-moratorium EMI for your loan.

Factors That Affect Your Loan EMI

Four variables determine your EMI, and understanding each one helps you negotiate a better deal.

Loan Amount

A higher principal means a higher EMI in direct proportion. A larger down payment on a home or car loan reduces the principal and lowers your EMI immediately.

Interest Rate

Personal loan rates in India range from about 10% to 24% a year, depending on the lender and your credit score. Even a 1 percentage point difference in rate changes total interest by thousands on a multi-year loan.

Loan Tenure

A longer tenure reduces your monthly EMI but raises total interest paid over the life of the loan. A shorter tenure means a higher EMI but a lower overall cost, so the right tenure balances monthly affordability against total cost.

Income and FOIR

Lenders cap your total EMI obligations, existing plus new, at 40 to 50 percent of gross monthly income under the FOIR rule. Run the Debt-to-Income Ratio Calculator to check where you stand before applying.

What Is a Good Credit Score for Loan Approval?

A CIBIL score of 750 or above is the benchmark most Indian lenders use to offer their lowest advertised rate.

CIBIL score ranges and typical loan outcomes.
CIBIL Score	Typical Outcome
750 and above	Best available rate, fastest approval
700 to 749	Approval likely, at a rate premium
650 to 699	Approval possible mainly through NBFCs, higher rate
Below 650	Approval difficult with most lenders

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How to Use This Loan Calculator

Getting an accurate EMI takes four inputs and about ten seconds.

Loan Amount: set the principal you plan to borrow.
Rate of Interest: enter the annual rate quoted by your lender.
Loan Tenure: choose your repayment period in months or years.
Processing Fee: add the lender's upfront fee to see the real total cost.
More settings: open this to model a prepayment or a moratorium period.

Frequently Asked Questions

Loan EMI is calculated using the reducing-balance formula: EMI = [P x R x (1+R)^N] / [(1+R)^N - 1]. P is the principal loan amount, R is the monthly interest rate (annual rate divided by 12 divided by 100), and N is the number of monthly instalments. The EMI stays fixed for the entire tenure, but the split between principal and interest changes every month as the outstanding balance falls.

Disclaimer: All calculations on this page are indicative only and based on the reducing-balance EMI method used by Indian lenders. Actual EMI, interest rate, and processing fee depend on your lender's underwriting policy and your credit profile. This calculator is for educational and planning purposes only and does not constitute financial advice. Consult your bank, NBFC, or a qualified financial adviser before taking a loan.