Know how to calculate interest on your personal loan
Using this formula, you can learn how interest is calculated on personal loans.
EMI = P x r x (1+r) ^ n / {(1+r) ^ n-1}
In the above formula,
P = The principal amount
R = The applicable interest rate
N = Tenure (in months)
Use the following example to understand how EMI is calculated on your personal loan.
Presume you’ve borrowed Rs. 10 lakh as a personal loan with a tenure of 48 months (4 years) and at an interest rate of 13%. This is how your EMI will be calculated:
P = Rs. 10,00,000
R = 13%
N = 48 months
EMI = 10,00,000 x 13 x (1+13)^48 / {(1+13)^48-1}
EMI =
- The total payable amount of this personal loan is Rs. 10,00,000 + Rs. 26,827* 48 months = Rs. 12,87,696.
- The principal loan amount is Rs. 10 lakh
- The interest to be paid is Rs. 2,87,696.
Factors that affect interest rate on your personal loan
Your personal loan interest rate is dependent on various factors such as:
Credit score or CIBIL score
CIBIL score determines the creditworthiness of a borrower. Therefore, a good credit score can help you avail of a sizeable loan with affordable interest rates.
Monthly income
Your monthly income is yet another deciding factor when determining the interest rate on your personal loan.
Loan amount
A good CIBIL score and repayment history will improve your chances of getting a substantial amount with a reasonable interest rate.
If you are an applicant with a robust credit score, have repaid your previous loans on time, and have a good monthly income, you can easily qualify for a personal loan.
Bajaj Finserv offers personal loans that come with attractive interest rates and quick disbursal within 24 hours* of approval. Use our online EMI calculator and know your loan EMI and interest rate in a few minutes.
*Terms and Conditions apply
Read More: Differences between flat and reducing interest rate
