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What is Personal Loan EMI Calculator & How it Works?

What is Personal Loan EMI Calculator & How it Works?

Last Updated : May 28, 2021, 9:04 p.m.

If you still don’t know how to calculate your monthly EMI for personal loan, no more worries now. Yes, because now you don’t have to call the bank to know the entire procedure of your monthly EMI calculation. Moreover, with the help of personal loan EMI calculator, it is easy for one and all to calculate his or her EMIs. All you need to do is just know your-

  • Loan Amount
  • Interest Rate
  • Loan Tenure

Once you know these three important variables, it is quite easy for you to calculate your EMIs just from the comfort of your home. More to the point, these are the three basic variables on which the monthly EMI for personal loan is calculated. However, there are other variables as well that play the crucial role in EMI calculation. These variables are as follow:

  • Your Work Profile-Salaried or Self-Employed
  • The Company You Work With
  • Your Credit History
  • EMIs of Other Loans

But, before going any further, let’s understand EMI and EMI Calculator in detail.

What is Personal Loan EMI Calculator?

The personal loan EMI calculator is nothing, but a tool which can be used to calculate the monthly installments that you will pay to undertake your personal loan. With the help of this tool you can know your monthly EMIs by just entering the few details in the calculator. Yes, you need to enter the loan amount, tenure and interest rate in the calculator so as to effectively calculate your personal loan EMI.

What EMI Stands For?

  • Equated Monthly Installment or commonly known as EMI is the payable amount that you pay every month to the banks or financial institutions until your entire loan amount is fully paid off.
  • EMI consists of interest on the loan along with the principal amount to be repaid.
  • Moreover, the total sum of the principal amount and interest is further divided by the tenure of the loan. Hence, the amount that comes out will be paid monthly.
  • However, in initial months your interest component of the EMI would be larger, and then it slowly reduces with each payment.
  • Actually, the exact percentage being granted towards the payment of the principal clearly depends upon the rate of interest.
  • Furthermore, your monthly EMI amount remains the same, but the proportion of interest as well as principal will change.
  • More to the point, one needs to pay less towards the interest and more towards the principal with each successive payment.

How Personal Loan EMI Calculator Works?

When it comes to personal loan EMI calculator, it works on the two basic formulae.

The first formula is used to calculate the monthly interest rate, whereas the second one is used to calculate the EMI. Now, let’s know how these two formulae work:

For Calculating the Monthly Interest Rate

Whenever you apply for a personal loan in a bank or any other financial institution, it would not be wrong to say that interest rate is the first and foremost thing that grabs the attention of all. So, before you start using the EMI calculator, you need to convert your annual interest rate into monthly interest rate. And, in order to convert that, below formula is used:

r=annual interest rate/12

For example- If a bank offers you 18% of interest rate annually, your monthly interest rate will be:


Thus, 1.5% will be your monthly interest rate for personal loan .

For Calculating the EMI

Calculating the EMI is a bit difficult as compared to calculating the monthly interest rate. To calculate your EMI, you need to use the below formula:

E = P . r . (1+r)^n/((1+r)^n – 1)

In this:


P=Principal Loan Amount

r=Monthly Interest Rate

n=Monthly Loan Tenure

For example- If you have borrowed a sum of Rs. 10,00,000 from a bank at an annual interest rate of 10.5% (10.5%/12=0.875 monthly) for 10 years ( 10×12=120 months), your EMI will be:

Rs. 10,00,000 *0.00875 * (1 + 0.875)120 / ((1 + 0.875)120 – 1) = Rs. 13,493

Now, you will pay Rs. 13, 493 for 120 months to repay your personal loan amount. Thus, your total payable=13, 493×120=16,19,220.

What are the Features of Personal Loan EMI Calculator?


With the help of EMI calculator, one can get accurate data or information. Without this effective tool, there might be possibility of you to make the mistakes.

Time Saving

If you calculate your monthly EMI with a pen and paper, it will surely take a lot of time. But, with personal loan EMI calculator, you can easily calculate your EMI within few minutes.

Easy Comparisions

EMI calculator allows you to have easy comparisons within few minutes. Yes, you can compare different banks simultaneously, and know different EMIs offered by them.

Endlessly Adjustable

The best thing about EMI calculators is the fact that you can use them endless times. Until and unless you are not sure or satisfied, you can fill the entries in the calculator n numbers of times. You can many times re-adjust the settings, and can get the end results.

It’s About More than Just the EMI

Many calculators apart from calculating your monthly EMI, give you a bit more. Yes, with interesting graphic representations, pie charts and tables, these calculators give you more than what you actually expect.

Now, that you know the basics of how EMI for personal loan , the next step is to know the interest rates offered by different banks. Yes, when it comes to personal loan, it would not be wrong to say that different banks offer different interest rates. Before you finalize or select one bank, it would be advisable to you to compare different banks first.

So, for your for your reference here is a list of different banks offering personal loan:

Bank Name Interest Rates Monthly EMI Tenure Processing Fee Min-Max Loan Amount
Kotak 11.50% - 20% Rs. 5,217 - Rs. 6,086 12 - 60 months Rs.500-2% Rs.50,000 – 20 Lakh
SBI 12.70% - 17.80% Rs.2550-Rs.9177 48 months 2.02%-3.03% Up to Rs 10 lakh
ICICI 13.49% - 17.5% Rs. 5,414 - Rs. 5,823 12 -60 months 0.50% - 2.25% Rs. 20 Lakh
HDFC 13.99% - 22.25% Rs. 5,464 - Rs. 6,328 12- 60 months 1.75%-2.5% Rs.15 Lakh
Bajaj Finserv 15.75% - 16% Rs. 5,642 - Rs. 5,771 12 - 60 months 2% Rs.25 Lakh

Documents Required to Take Personal Loan

Salaried Self-Employed
1 photocopy of PAN Card 1 photocopy of PAN Card
Identity Proof Balance Sheets
3 to 6 months Bank Statements Profit & Loss Account
Residence Proof Partnership Deed & other mandatory documents etc.
Salary Slip
Guarantors & their same set of documents

Eligibility Criteria for Personal Loan

Age Minimum Income Total Years in Job/Profession Years in Current Residence
21-60 years 12,000 per month 2 years-3 years 6 Months-1 year

Reasons to Take Personal Loan

  • Credit Card Dues
  • Emergencies like Hospital Expenses
  • Marriage Expenses
  • Margin Money for the Home
  • Home Renovation
  • Travel Expenditure

Factors that Affect Personal Loan Interest Rates

  • Income
  • Your Company Status
  • Credit and Payment History
  • Relationship with your Bank
  • Individuals Negotiation Skills

Advantages of Personal Loan

  • Personal loans are multipurpose
  • Getting the personal loans is very fast
  • Minimal documentation required
  • No collateral or security needed

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