How to use an EMI calculator to get the best personal loan deal

If you are planning to raise a personal loan, it is vital to note that it usually has a fixed interest rate, which means the monthly instalment at which you start paying at the start of the loan will continue till the end of the loan.

However, there are three variables on which your loan EMI is dependent. These three variables are discussed briefly below:

1. Interest rate: This refers to the rate of interest that the bank charges on a loan. The higher the rate of interest, the larger the monthly instalment.
2. Tenure of loan: This refers to the total period for which the personal loan is scheduled to remain outstanding. When the borrower is supposed to repay the loan over a period of five years, the loan's tenure would be five years. The longer the loan tenure, the bigger the personal loan EMI.
3. Loan Amount: This refers to the total amount borrowed. The larger the loan amount, the bigger the EMI and in contrast, the smaller the loan amount, the lower the monthly instalment.

Personal loan EMI calculator

Suppose you plan to raise a ₹3 lakh personal loan, on which the bank is charging an annual interest rate of 11 per cent, with a payback period of 24 months. The monthly instalment turns out to be ₹13,982.

Now, suppose you want this instalment to fall below ₹10,000, what will you do? There are only two options: pay a lower interest rate or extend the loan repayment period.

And now, since the bank would not agree to settle for a lower interest rate, what will you do? You will increase the loan repayment period.

Let us consider increasing the loan repayment period to 30 months. Now, the EMI becomes ₹11,483.

Since the EMI is still higher than ₹10,000, we will now increase the loan duration to 36 months. The monthly instalment is now ₹9,821.

This is how we arrived at the conclusion that extending the loan repayment period from 24 to 36 months would reduce the monthly instalment from ₹11,483 to ₹9,821. And all these calculations could be made possible with the help of a personal loan EMI calculator.

Furthermore, it is vital for aspiring borrowers to carefully check and follow up with the most recent personal loan interest rates, so that they can make the best possible borrowing decisions. The current personal loan interest rates are discussed briefly in the following table:

Personal loan interest rates 2025

Note: The interest rates discussed above are illustrative. For the most up-to-date interest rates, terms, and conditions, please refer to the official websites of the respective lending institutions.

Therefore, securing a favourable personal loan deal is crucial for a borrower's overall financial well-being. If the borrower fails to secure the optimal personal loan with the most reasonable interest rates, it can complicate the entire repayment plan.

Before choosing a personal loan product, borrowers should carefully understand the associated risks. Personal loans come with risks, including the possibility of high interest rates, the risk of a debt trap, negative implications for one's credit score if the loan is not managed properly, hidden charges, and legal consequences if the borrower defaults. Therefore, any personal loan decision should only be made after thorough due diligence and consultation with a certified financial advisor.

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