What is a Loan?
A loan is a financial arrangement where a lender provides funds to a borrower, who agrees to repay the amount with interest over a fixed period. Personal loans, home loans, car loans, and education loans are common types of credit products available in India. Each loan type has a different interest rate range, tenure, and eligibility criteria.
Personal loans are unsecured, meaning no collateral is required. Lenders evaluate your credit score, income, and repayment history before approving the loan. The interest rate on personal loans is typically higher than secured loans because of the increased risk to the lender.
How this loan calculator helps you
Whether you are planning a personal loan or comparing offers from different lenders, this calculator makes the process simple and transparent:
Loan EMI formula
The EMI for any loan is calculated using the standard reducing-balance formula:
EMI = [P x R x (1+R)^N] / [(1+R)^N - 1]
Where 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.
Factors affecting your loan EMI
Three key factors determine your monthly EMI:
Loan Amount
The principal amount you borrow directly affects your EMI. A higher loan amount means a higher monthly instalment. Making a larger down payment reduces the principal and lowers your EMI.
Interest Rate
Personal loan interest rates in India range from about 10% to 24% per annum depending on the lender, your credit score, and your income. Even a 1% difference in rate can significantly impact the total interest paid over the loan term.
Loan Tenure
A longer tenure reduces your monthly EMI but increases total interest paid. A shorter tenure means higher EMIs but lower overall cost. Personal loan tenures typically range from 12 to 60 months. Use the slider above to find the right balance.