1. What is the Personal Loan Payment Formula?

The personal loan payment formula calculates the fixed monthly payment (EMI) required to repay a loan over a specified term. It accounts for the principal amount, interest rate, and loan duration.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

• \( P \) — Principal loan amount (INR)
• \( r \) — Monthly interest rate (annual rate divided by 12)
• \( n \) — Number of monthly payments (loan term in months)
• \( PMT \) — Monthly payment amount (INR)

Example: For a ₹1,00,000 loan at 10.85% p.a. for 5 years (60 months), the monthly payment would be ₹2,167.

3. Importance of Loan Calculation

Details: Accurate loan payment calculation helps borrowers understand their financial commitments, compare loan offers, and plan their budgets effectively.

4. Using the Calculator

Tips: Enter the loan amount in INR, annual interest rate (e.g., 10.85 for 10.85%), and loan term in months. The calculator will show monthly payment, total interest, and total repayment amount.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical interest rate for personal loans in India 2025?
A: Rates vary by lender but typically range from 10.5% to 24% p.a. depending on credit score and other factors.

Q2: How does loan term affect payments?
A: Longer terms reduce monthly payments but increase total interest paid. Shorter terms have higher payments but lower total cost.

Q3: Are there other charges besides interest?
A: Yes, lenders may charge processing fees (0.5-2.5% of loan amount), prepayment penalties, or late payment fees.

Q4: Can I prepay my personal loan?
A: Most lenders allow prepayment after 6-12 months, often with a prepayment penalty (1-5% of outstanding amount).

Q5: How can I reduce my loan interest?
A: Options include making part-prepayments, choosing shorter terms, or negotiating lower rates with good credit history.