Personal Loan Calculator
Calculate your Personal Loan EMI and understand total interest payable.
Personal loans typically range from 1 to 5 years.
Monthly EMI
₹6,691
Principal Amount
₹2,00,000
Total Interest
₹40,866
Total Payment
₹2,40,866
How the Personal Loan Calculator works
Reviewed by Dinesh Babu · Last updated July 2026
This calculator computes the EMI and total interest for a personal loan from the loan amount, interest rate and tenure. Personal loans are unsecured — there is no collateral — so lenders charge more to cover their risk, often 11% to 24% per year depending on your credit profile.
It uses the standard reducing-balance EMI formula. Because rates are high and tenures short (usually 1 to 5 years), both the rate you are offered and hidden charges like processing fees and foreclosure penalties matter a great deal.
One trap to watch is how the rate is quoted: a flat rate looks cheaper than a reducing rate, but almost always costs you more.
EMI formula
EMI = P × r × (1 + r)ⁿ / ((1 + r)ⁿ − 1)
P = principal, r = monthly rate, n = number of months. This is a reducing-balance calculation.
The flat-rate trap
A flat interest rate is calculated on the original loan amount for the entire tenure, even though you are steadily paying the loan down. A reducing (or diminishing) rate charges interest only on the balance you still owe, which is how EMIs really work.
So a 12% flat rate is not comparable to a 12% reducing rate — the flat version can cost almost twice the interest. When comparing offers, always convert to the effective reducing rate (or compare total interest in rupees), never trust the flat headline.
Fees that inflate the real cost
- Processing fee: often 1-3% of the loan, deducted upfront, so you receive less than you borrow.
- Prepayment / foreclosure charges: many personal loans levy 2-5% if you clear the loan early.
- GST applies on fees and charges, adding a little more.
- A higher credit score, stable income and an existing relationship with the lender all help you get a lower rate.
| Rate type | How interest is charged | Approx. total interest |
|---|---|---|
| 12% flat | On full ₹1 lakh for the whole term | ₹24,000 |
| 12% reducing | On the falling balance each month | ₹13,000 |
A ₹5 lakh loan over 3 years
A ₹5,00,000 personal loan at 15% p.a. for 3 years (36 months) has an EMI of about ₹17,333, with roughly ₹1.24 lakh paid as interest over the term. Add a typical 1-2% processing fee and the real cost is higher still.
Flat rate vs reducing rate
On a ₹1,00,000 loan over 2 years, a 12% flat rate charges interest on the full ₹1 lakh for the whole term — about ₹24,000. A 12% reducing rate charges interest only on the falling balance — about ₹13,000. Same headline number, nearly double the interest under flat.
Common mistakes to avoid
- Comparing a flat rate against a reducing rate as if they were the same — the flat one usually costs far more.
- Ignoring the processing fee, which is deducted upfront so you receive less than the sanctioned amount.
- Not checking foreclosure charges before taking the loan, then finding early repayment is penalised.
- Borrowing more than you need because the EMI looks affordable — high interest makes every extra rupee expensive.
- Using a personal loan for something a cheaper secured loan (or savings) could cover.
Frequently asked questions
Why are personal loan interest rates high?+
Personal loans are unsecured — there is no collateral for the lender to recover — so they charge more to cover the risk, often 11% to 24% per year depending on your credit score, income and lender.
What is the difference between a flat and a reducing interest rate?+
A flat rate charges interest on the full original amount for the whole tenure; a reducing rate charges only on the balance you still owe. A 12% flat rate can cost nearly double the interest of a 12% reducing rate, so never compare the two by their headline number alone.
How can I get a lower personal loan rate?+
A higher credit score, stable and sufficient income, a lower existing debt burden, and an existing relationship with the lender all help. Always compare offers from several lenders before choosing.
What fees should I watch out for?+
A processing fee (often 1-3%, deducted upfront so you receive less than you borrow), foreclosure or prepayment charges (often 2-5%), and GST on those fees. Factor these in — they raise the real cost above the headline rate.
Can I foreclose a personal loan early?+
Usually yes, but many lenders charge a foreclosure fee of a few percent of the outstanding balance. Check your agreement; if there is no penalty, prepaying early saves interest.
Is a personal loan better than a credit card?+
For larger amounts repaid over time, a personal loan's rate is usually much lower than a credit card's revolving rate, making it cheaper. For small, short-term needs you can clear in full, a card may be simpler.