Personal loan EMI example
A ₹5 lakh personal loan at 14% for 3 years costs ₹17,089 per month. The total interest over three years is about ₹1.15 lakh. Stretch the same loan to 5 years and the EMI falls to ₹11,634, but interest rises to ₹1.98 lakh. Because personal loan rates are high, a shorter tenure saves a lot of money.
EMI = P × r × (1 + r)^n / [ (1 + r)^n − 1 ] r = yearly rate ÷ 1200, n = months
Personal loan interest rates (indicative)
| Lender | Interest rate (p.a.) | Processing fee |
|---|---|---|
| SBI | 11.15% – 15.30% | Up to 1.5% |
| HDFC Bank | 10.85% – 24.00% | Up to ₹6,500 |
| ICICI Bank | 10.85% – 16.65% | Up to 2% |
| Axis Bank | 11.25% – 22.00% | Up to 2% |
| Bajaj Finserv | 11.00% – 32.00% | Up to 3.93% |
The rate you get depends mainly on your credit score, employer and existing loans. Salaried employees of large companies with a score above 750 get rates close to the lower end.
Before you take a personal loan
- Borrow only what you need. Every extra ₹1 lakh at 14% for 3 years costs you about ₹23,000 in interest.
- Compare the total cost, not just the rate. Processing fees, insurance add-ons and prepayment charges add up.
- Check the foreclosure terms. Many banks charge 2% to 5% for closing the loan early, though some allow free prepayment after 12 EMIs.
- Avoid taking a personal loan to invest in the stock market or to pay for lifestyle spending. It makes sense for emergencies, medical bills or consolidating costlier credit card debt.
- Keep all EMIs combined below 40% to 50% of your take-home salary.
Frequently asked questions
What is the EMI for a ₹2 lakh personal loan?
At 14% for 2 years the EMI is ₹9,603; for 3 years it is ₹6,836. Enter your bank’s rate in the calculator to get the exact figure.
What is the minimum salary required for a personal loan?
Most banks require a net monthly salary of ₹15,000 to ₹25,000. Higher salary and a good credit score get you a bigger loan and a lower rate.
Can I prepay or foreclose a personal loan?
Yes, but usually after a lock-in of 6 to 12 months and with a foreclosure charge of 2% to 5% on the outstanding amount. Some lenders waive it for floating rate loans.
Is a personal loan better than a credit card EMI?
Personal loans at 11% to 16% are much cheaper than credit card interest of 36% to 42% per year. If you cannot clear a card bill in full, converting it into a personal loan saves money.
Does a personal loan affect my credit score?
Taking the loan causes a small temporary dip. Paying every EMI on time improves your score over the loan period. Missed payments hurt it badly.
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