How does Personal Loan EMI Calculator Work?
Personal loans have fixed repayment tenure with monthly repayments known as EMI (equated monthly installments) that need to be made over the entire loan tenure. EMI calculator is a tool that helps you calculate your loan EMI based on some key data such as the amount borrowed, interest rate applicable to the loan and tenure. You can use the EMI calculator free of charge any time of the day and unlimited number of times to calculate personal loan EMI that fits into your budget.
Procedure to Use Paisabazaar's Personal Loan EMI Calculator
The personal loan EMI calculator on Paisabazaar’s website uses some key information provided by the user to show the EMI amount instantly. The following is a step-by-step guide regarding how to use the calculator:
Step 1. Once you have logged on to Paisabazaar’s personal loan EMI calculator page, input your desired personal loan amount.
Step2. Provide the expected personal loan interest rate
Step3. Provide the tenure over which you want to repay your loan
On completing the above steps, your personal loan EMI is displayed instantly. Additional details you can view include total interest payable and the total amount payable (loan principal + interest).
Personal loan EMI Calculation Formula
The formula used by the personal loan EMI calculator is:
EMI = [P x (R/100) x {1+(R/100)}^N]/[{1+(R/100)}^(N-1)]
Where,
EMI = equated monthly installments
P = loan principal i.e. amount borrowed
R = loan interest rate (monthly basis) = annual interest rate/12
N = Loan tenure in months
The above formula works for calculating all types of loan EMI, not just personal loan EMI. With the availability of online EMI calculator, it is no longer necessary to perform this tedious calculation by hand as the result can be obtained instantly by providing the required data.
It is common knowledge that EMI payable varies based on the loan amount, interest rate and tenure of a loan. The following table illustrates the difference in EMI payments for various loan amounts over different loan tenure:
| Loan Particulars |
EMI for 1 Year Tenure (Rs.) |
EMI for 2 Year Tenure (Rs.) |
EMI for 3 Year Tenure (Rs.) |
EMI for 4 Year Tenure (Rs.) |
EMI for 5 Year Tenure (Rs.) |
| Rs. 1 lakh @11.50% |
8,862 |
4,684 |
3,298 |
2,609 |
Rs. 2,199 |
| Rs. 2 lakh @12.5% |
17,817 |
9,461 |
6,691 |
5,316 |
Rs. 4,500 |
| Rs. 3 lakh @12% |
26,655 |
14,122 |
9,964 |
7,900 |
Rs. 6,673 |
| Rs. 4 lakh @13% |
35,727 |
19,017 |
13,478 |
10,731 |
9,101 |
| Rs. 5 lakh@12.5% |
44,541 |
23,654 |
16,727 |
13,290 |
11,249 |
While there are often pre-payment penalties associated with paying off personal loans ahead of time, it is usually cheaper to prepay your loan as compared to sticking to the longer (original) tenure. For example suppose you decide to prepay your Rs. 4 lakh loan @ 13% after 2 years (instead of waiting till the end of the 5 year tenure) and incur a prepayment penalty of 3%. In this case, the total amount repaid will be calculated as follows:
Principal amount outstanding at the end of the 2nd year is Rs. 270,115
So total prepayment penalty @3% = Rs. 8103.
Interest paid on the loan for the first 2 years = Rs. 88,544.
Total amount repaid = outstanding loan principal + Interest (for 2 years) + prepayment penalty = Rs. 496,647
Total amount to be repaid using regular EMI over 5 year tenure = Rs. 546,074
Hence total savings as a result of prepayment = Rs. 49, 427 even after a 3% foreclosure charge is paid.
Personal Loan EMI Calculator in Excel Sheet
You can use the MS-Excel formula “PMT” to calculate your personal loan EMI using on an Excel sheet. The complete formula syntax for EMI calculation using Excel is:
PMT (rate, nper, pv)
Where,
rate = Personal loan interest rate (in percentage)
nper = Loan tenure in months i.e. number of EMIs payable
pv = Loan principal (present value)
While the EMI calculation results will be the same whether you use the online EMI calculator or the Excel formula, the benefit of using Excel formula is that you can use it offline as well.
Download the PL EMI Calculator in Excel
EMI Calculation Using Flat Balance vs. Reducing Balance Interest Calculation Method
As discussed in the above sections, one of the key factors based on which the EMI of a personal loan varies is the loan principal. If the EMI calculation is made using the flat balance method, the interest payable on the personal loan is calculated on the entire loan amount over the entire loan tenure. Thus, the EMI remains unchanged during the entire loan tenure.
On the other hand, if the reducing balance interest rate method is used to calculate personal loan EMI, interest is calculated on the principal outstanding for each successive month instead of the entire amount borrowed. As a result, the principal used to calculate interest decreases over time leading to a decrease in the successive loan EMI as the repayment tenure progresses. Currently most banks offer personal loans based on the reducing balance interest calculation method and the same method is used by Paisabazaar’s online personal loan EMI calculator.
The following is a comparison of calculating the interest payable using the flat rate method vs. the reducing balance interest calculation method:
| Personal Loan Details |
EMI for Flat Balance Method (Rs.) |
EMI for Reducing Balance Method (Rs.) |
Total Interest Savings over Loan Tenure (Rs.)* |
| Rs. 1 lakh @12% for 3 Years |
3,778 |
3,321 |
16,428 |
| Rs. 2 Lakh @ 15% for 5 years |
5,833 |
4,758 |
64,521 |
| Rs. 3 lakh @ 10.50% for 5 years |
7,625 |
6,448 |
70,610 |
| Rs. 5 lakh @ 11% for 4 years |
15,000 |
12,923 |
99,707 |
| Rs. 7 lakh @ 11.25% for 3 years |
26,007 |
23,000 |
1,08,248 |
*The savings generated are as a result of the lower EMI resulting from use of the reducing balance method.
Factors affecting Your EMI Amount
The key factors affecting your overall EMI amount payable include the following:
- Loan principal – As a rule of thumb, the higher the amount borrowed as a personal loan, the higher will be your EMI as long as the tenure and interest rate remains constant.
- Interest rate – The higher the interest rate, the higher will be your individuals EMI pay out as well as the total interest payable on your personal loan.
- Tenure – When a longer tenure is opted for, individual EMI payments will decrease as compared to a shorter tenure for the same loan. But a longer tenure also results in higher total interest payable over the loan tenure.
These features of a personal loan especially interest rate and loan principal can vary from one applicant to another. The following are the key applicant-specific factors that can impact personal loan:
- Credit Score/Credit History
- Income
- Outstanding debt
- Credit Mix (i.e. ratio of secured to unsecured credit)
Common EMI Bounce Charges Levied by the Bank
In case, loan EMI payments are not completed in a timely manner, there are a few penalties and charges that might be applicable over and above the actual EMI payable. These include:
- Cheque/NACH/SI bounce charges: These are applicable when timely EMI payment does not happen due to low balance in account or closure of the account used for EMI payments. This is usually a fixed charge applicable each time an automated EMI deduction fails.
- Late payment charges: In case of delayed payment of EMI, a late payment charge may be applied by the bank/NBFC from whom the loan was obtained. This charge can be either a fixed amount or a percentage of the amount remaining unpaid.
- Penal Interest charges: Penal interest charges are applicable on the unpaid EMI amount. This is usually a fixed percentage amount payable per month on the principal amount unpaid till the due EMI is paid.
The above charges are applicable in addition to the original EMI payable on the personal loan.
EMI Breakdown
Equated monthly instalments comprise two components – the principal amount repaid and the interest paid. The proportion of individual components of the EMI is provided to the borrower in the amortisation schedule. The following is a sample of the EMI breakdown for a personal loan of Rs. 4 lakh featuring an interest rate of 11.5% and tenure of 1 years i.e. 12 months:
| Month Number |
Principal Repayment Component (Rs.) |
Interest Repayment Component (Rs.) |
Total EMI Payment (Rs.) |
| 1 |
31,613 |
3,833 |
35,446 |
| 2 |
31,916 |
3,530 |
35,446 |
| 3 |
32,222 |
3,225 |
35,446 |
| 4 |
32,530 |
2,916 |
35,446 |
| 5 |
32,842 |
2,604 |
35,446 |
| 6 |
33,157 |
2,289 |
35,446 |
| 7 |
33,475 |
1,971 |
35,446 |
| 8 |
33,795 |
1,651 |
35,446 |
| 9 |
34,119 |
1,327 |
35,446 |
| 10 |
34,446 |
1,000 |
35,446 |
| 11 |
34,776 |
670 |
35,446 |
| 12 |
35,110 |
336 |
35,446 |
In the above example, the reducing balance interest calculation method has been used hence the interest component of the loan EMI has decreased over the loan tenure.
Check PL EMI for top Banks/NBFCs using Paisabazaar’s EMI Calculator
You can check personal loan EMI of the following top banks and NBFCs in India using Paisabazaar’s online personal loan EMI Calculator:
FAQs
Q1. How to reduce personal loan EMI?
You can reduce your personal loan EMI by one of three ways:
- Opt for a lower loan amount
- Opt for a longer EMI tenure
- Get approved for a loan with a lower interest rate/complete a personal loan balance transfer to get a lower rate on the outstanding loan
Q2. Can I pay my personal loan EMI using a credit card?
No. As of yet, no option is available for payment of personal loan EMI using a credit card. You do have the option of taking a loan on credit card to pay your due personal loan EMI, but it is not advisable and financial irresponsible.
Q3. Is GST applicable to personal loan EMI?
No. GST is not applicable to personal loan EMI. However, GST at 18% is applicable on various other personal loan charges such as processing fees, foreclosure charges, late payment charges, etc.
Q4. How to calculate EMI for personal loan manually?
The formula used to calculate EMI for personal loan is:
EMI = [P x (R/100) x {1+(R/100)}^N]/[{1+(R/100)}^(N-1)]
Where,
EMI = equated monthly installments
P = loan principal i.e. amount borrowed
R = loan interest rate (monthly basis) = loan interest rate (annual)/12
N = Loan tenure in months
Alternately you can use the following MS-Excel formula to calculate your personal loan EMI manually:
PMT (rate, nper, pv)
Where,
rate = Personal loan interest rate (in percentage)
nper = Loan tenure in months i.e. number of EMIs payable
pv = Loan principal (present value)
Q5. How can I change my personal loan EMI date?
In case you want to change your personal loan EMI date, you should contact the customer care department of your lender and follow the instructions provided by them. The process to initiate this change tends to vary significantly from one lender to another.
Q6. What will happen if personal loan EMI is not paid?
In case you do not pay your personal loan EMI, you will have to incur penal charges in the form of late payment fees and penal interest on the amount remaining unpaid. If the amount is still unpaid after a 3 month period, the lender will try to recover the dues using recovery agents and subsequently offer you a settlement. The lender will also report this delayed payment/default to credit agencies and this will adversely impact your credit score making it difficult to get approved for new loans/credit cards in the future.
Q7. Which is better personal loan or credit card EMI?
The two financial products are not comparable as they serve markedly different purposes. While credit card EMI conversion allows you to fund big-ticket purchases after making the purchase, a personal loan features much more flexible end use. Moreover, while the interest rate of personal loans is typically lower than the rate offered in case of EMI conversion, those opting for no-cost EMI definitely get a better deal. The impact of both instruments on the borrower’s credit score is also comparable as these are both types of unsecured credit that increase the outstanding debt of the borrower.
Q8. Can I get my personal loan EMI changed?
There are two key ways you can decrease your existing personal loan EMI:
Option 1- Make a pre-payment on your existing loan. This will decrease the outstanding personal loan principal leading to a lower EMI pay out over the remainder of the loan tenure.
Option 2- Negotiate with the lender for an extension of your loan tenure. This will decrease your individual personal loan EMI pay out but increase your overall interest payment over the loan tenure.
Q9. Does personal loan EMI calculator include the GST component in its results?
No. Currently, Paisabazaar’s EMI calculator does not take into account the GST component when calculating the EMI on a loan.
Q10. Can I Prepay My Personal Loan EMI?
Pre-payment refers to making repayments beyond your regular personal loan EMI payment amounts. In case you pay off the entire loan before the completion of the loan tenure, it is termed as foreclosure or full prepayment. In case only a portion of the outstanding loan principal is pre-paid ahead of time, it is termed as partial pre-payment. While most banks allow both partial and full pre-payment of personal loans subject to some key terms and conditions, the exact details tend to vary from lender to lender. So you will have to get in touch with your lender or read through the loan agreement in order to figure out if prepayment is allowed in case of your personal loan.
