ReckonBoxHow the personal loan EMI calculator works
A personal loan EMI is the fixed monthly payment on an unsecured loan, one with no asset behind it, worked out on the reducing-balance method from the amount, the rate and the tenure. Because nothing secures it, a personal loan is priced higher than a home or car loan, and it carries fees that quietly raise what it really costs. This calculator shows the EMI and total interest, then goes further: the true rate once the processing fee and GST are counted, what closing the loan early would cost and save, and the loan your salary can carry.
Start with the headline. A Rs 5,00,000 loan at 11.5% for 5 years has an EMI of Rs 10,996, and across 60 months you repay Rs 6,59,760, of which Rs 1,59,760 is interest. That's the sticker figure. The sections below are where a personal loan differs from the secured kind.
The EMI formula
EMI is P times r times (1 + r) to the power n, all divided by (1 + r) to the power n minus 1, where P is the loan amount, r the monthly rate and n the number of months. The monthly rate is the annual rate divided by 12 and by 100, so 11.5% a year is about 0.00958 a month. Interest is charged only on the balance still outstanding, so early EMIs are mostly interest and later ones mostly principal, even though the payment never changes.
One thing to check before you trust any quoted rate: whether it's a reducing rate or a flat one. A flat rate charges interest on the full amount for the whole tenure, so a 12% flat rate is close to a 21% reducing rate. Personal loan sellers sometimes lead with the flat number because it looks smaller.
The fee that raises your real rate
A processing fee is a one-off charge of about 1.5% to 3% of the loan, plus 18% GST, deducted before the money reaches your account. It means you're repaying as if you borrowed the full amount while receiving less than it. On the default Rs 5,00,000 loan, a 2% fee is Rs 10,000, which becomes Rs 11,800 once GST is added, so Rs 4,88,200 lands in your account. Repaying the full Rs 5,00,000 schedule on Rs 4,88,200 in hand lifts the effective rate from 11.5% to about 12.55%.
That gap is the number lenders rarely show. Two loans can quote the same 11.5% and cost you differently once one charges 1% and the other 3% upfront, which is why the effective rate, not the headline rate, is the figure to compare across offers.
What foreclosing early costs and saves
Foreclosure is repaying the entire outstanding balance before the tenure ends, and on a personal loan it carries a charge of about 2% to 5% of that balance plus GST, unlike a floating home loan, which cannot be charged for it. Many lenders also set a lock-in of 6 to 12 months before you may foreclose at all. Closing early still tends to save interest, but the saving falls sharply as the loan ages, because less interest is left to avoid.
| Close after | Outstanding | Charge to close | Interest saved (net) |
|---|---|---|---|
| Year 1 | Rs 4,21,492 | Rs 19,894 | Rs 86,422 |
| Year 2 | Rs 3,33,464 | Rs 15,740 | Rs 46,652 |
| Year 3 | Rs 2,34,762 | Rs 11,081 | Rs 18,061 |
| Year 4 | Rs 1,24,091 | Rs 5,857 | Rs 2,004 |
The live table above runs these rungs at your own charge percent. A windfall in year one wipes out about Rs 86,000 of future interest net of the fee here, while the same decision in year four barely clears the charge. Timing decides whether foreclosing is worth it, as much as the wish to be debt free.
How much your salary supports
Lenders size a personal loan against the FOIR, the fixed obligations to income ratio, and usually cap the total of your EMIs near 50% of net monthly income. Enter your take-home income and the calculator shows the EMI as a share of it and the largest loan a 50% FOIR allows. On a Rs 50,000 income, that leaves Rs 25,000 for EMIs, which supports close to Rs 11,00,000 over 5 years at 11.5%, before the lender weighs your credit score and any running loans.
A personal loan approval leans heavily on that credit score. A score above 750 tends to unlock both a larger loan and the lower end of the rate band, while a thin file narrows both, so treat this eligibility as a planning ceiling and let the lender have the final say.
What this does not promise
The EMI uses the reducing-balance math every lender applies, and the fee and foreclosure figures follow the common market bands. Your own lender may set a different processing fee, a different foreclosure charge, or a lock-in that blocks early closure for a time, and GST rules can change. Approval, the final rate, and the sanctioned amount depend on your income, credit history and the lender's policy. This is a planning tool, not financial advice, so confirm the rate, the fees and the foreclosure terms in your loan agreement before you sign.
Frequently asked questions
What is a personal loan EMI calculator? A personal loan EMI calculator works out the fixed monthly installment on an unsecured personal loan from the amount, the interest rate and the tenure, using the reducing-balance method. A Rs 5,00,000 loan at 11.5% for 5 years has an EMI of Rs 10,996 and about Rs 1,59,760 of total interest.
What is the personal loan EMI formula? The EMI formula is EMI = P times r times (1 + r) to the power n, divided by (1 + r) to the power n minus 1, where P is the loan amount, r is the monthly rate (the annual rate divided by 12 and by 100) and n is the tenure in months. Interest is charged on the reducing balance, so each EMI is part interest and part principal.
What interest rate do personal loans charge? Personal loan rates in India run about 10% to 24% a year, higher than home or car loans because a personal loan is unsecured, with no asset backing it. The exact rate depends on your credit score, income and employer, so a score above 750 tends to fetch the lower end of the band.
How much personal loan can I get on my salary? Lenders cap the total of your EMIs at about 50% of net monthly income, a limit called the FOIR, so a higher income supports a larger loan at the same rate and tenure. On a Rs 50,000 take-home income, a 50% FOIR leaves Rs 25,000 for EMIs, which supports roughly Rs 11,00,000 over 5 years at 11.5%, before the lender checks your credit score and existing loans.
How does the processing fee change the real cost? A personal loan carries a one-off processing fee, usually 1.5% to 3% of the loan, plus 18% GST on that fee, and it is deducted before the money reaches you. On a Rs 5,00,000 loan a 2% fee is Rs 10,000, which becomes Rs 11,800 with GST, so you receive Rs 4,88,200 but repay as if you borrowed the full Rs 5,00,000. That lifts the effective rate here from 11.5% to about 12.55%.
What does it cost to foreclose a personal loan early? Foreclosing a personal loan means repaying the whole outstanding balance ahead of schedule, and lenders usually charge 2% to 5% of that balance plus 18% GST, often only after a lock-in of 6 to 12 months. Closing early still tends to save interest, but the saving shrinks as the loan ages: on the default loan, closing after year 1 saves about Rs 86,000 net, while closing after year 4 saves only about Rs 2,000.
Is a part-payment allowed on a personal loan? Many lenders allow a part-payment, where you pay a lump sum toward the principal without closing the loan, though some charge a fee of a few percent on the amount prepaid. A part-payment cuts the outstanding balance and every future interest charge on it, so the loan finishes sooner or the EMI falls.
What is the difference between a flat and a reducing rate? A reducing-rate loan charges interest only on the balance still outstanding, while a flat-rate loan charges interest on the full amount for the whole tenure, so the same flat number costs far more. A flat rate of about 12% works out close to a 21% reducing rate, so always confirm which basis a personal loan is quoted on before comparing offers.