Personal Loan EMI Calculator
Your personal loan EMI and total interest, and the true interest rate once the processing fee and GST are counted.
A ₹5 lakh personal loan at 12% for 3 years costs ₹16,607 a month and ₹97,858 of interest. With a 2% processing fee plus GST taken from the loan, the true rate is about 13.7%.
The words on this page, explained simply
New to this? Here is what each term means, in plain English.
- EMI (equated monthly instalment)
- The same amount you pay the lender every month until the loan is repaid. Each EMI pays that month's interest first; the rest reduces what you owe.
- Principal
- The amount you borrowed, or the part of it you still owe. Interest is charged on this.
- Tenure
- How long you take to repay the loan. A longer tenure means a smaller EMI but much more interest in total.
- Reducing balance
- Interest charged only on what you still owe, which shrinks every month. Banks quote home, car and personal loan rates this way.
- Processing fee
- A one-time charge for giving the loan, usually a percentage of it plus 18% GST, often taken out of the money you receive.
- True rate
- The interest rate once fees are counted: the rate at which the money you actually receive equals the EMIs you pay back.
- Repayment schedule
- The year-by-year split of your EMIs into interest and principal, and what you still owe after each year.
Personal loans are unsecured, so they cost more than home or car loans and run for 1 to 5 years. Lenders usually deduct a processing fee, plus 18% GST on it, from the amount they pay you. You repay the full loan, so the fee raises the real rate.
How EMI is calculated
EMI = P × r × (1 + r)n ÷ ((1 + r)n − 1), where P is the loan amount, r is the yearly rate ÷ 12 (as a decimal) and n is the number of months. Banks charge interest on the balance still owed (reducing balance), so in the early years most of each EMI is interest; by the end it is almost all principal.
The true rate after fees
The calculator finds the interest rate at which the money you actually receive equals the EMIs you pay. The shorter the loan, the more a fee adds, because it is spread over fewer months.
| Processing fee | 1 year | 3 years | 5 years |
|---|---|---|---|
| 1% + GST | 14.3% | 12.8% | 12.5% |
| 2% + GST | 16.6% | 13.7% | 13.1% |
| 3% + GST | 18.9% | 14.5% | 13.6% |
For a 12% loan of any amount.
Key takeaways
- A 2% fee on a 3-year 12% loan makes it cost about 13.7%.
- Fees hurt most on short loans.
- Compare offers by EMI, fees and total repaid, not the headline rate alone.
Frequently asked questions
What is the EMI on a ₹5 lakh personal loan?
At 12% a year: ₹23,537 for 2 years, ₹16,607 for 3 years and ₹11,122 for 5 years.
How does the processing fee change the interest rate?
The fee and its 18% GST come off the money you receive, but you repay the whole loan. A 2% fee on a 3-year loan at 12% makes the true rate about 13.7%.
Can I prepay a personal loan?
Usually after a lock-in, often with a charge on fixed-rate loans; check the loan agreement. RBI's no-charge rule covers floating-rate loans to individuals.