1. What is the Personal Loan Payment Formula?

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

2. How Does the Calculator Work?

The calculator uses the personal 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 years × 12)
• \( PMT \) — Monthly payment amount (INR)

Explanation: The formula calculates the fixed payment that covers both principal and interest each month, ensuring the loan is paid off in full by the end of the term.

3. Importance of Loan Calculation

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

4. Using the Calculator

Tips: Enter the principal amount in INR, annual interest rate in percentage, and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is the typical interest rate for personal loans in India?
A: Interest rates typically range from 10% to 24% per annum depending on credit score, lender, and loan amount.

Q2: Are there any prepayment charges?
A: Many lenders charge 2-5% of the outstanding amount for prepayment, though some offer free prepayment options.

Q3: What is the maximum loan term available?
A: Most private lenders offer personal loans with terms ranging from 1 to 5 years, though some may extend up to 7 years.

Q4: How does credit score affect the interest rate?
A: Borrowers with higher credit scores (750+) typically qualify for lower interest rates compared to those with lower scores.

Q5: What other charges should I consider?
A: Additional charges may include processing fees (0.5-2.5% of loan amount), late payment fees, and GST on charges.