What is a Personal Loan?
A Personal Loan is an unsecured form of credit provided by financial institutions to help you meet immediate financial needs. Unlike home or car loans, it is not restricted to a specific purpose.
Because it is "unsecured," you do not need to pledge any collateral (like property or gold). The approval is based primarily on your Credit Score, income stability, and repayment capacity.
Who is Eligible for a Personal Loan?
- Employment: Salaried (MNC/Pvt Ltd/Govt) or Self-Employed.
- Age: 21 to 60 years.
- Credit Score: A CIBIL score of 750+ gets the best rates.
- Income: Minimum monthly net income of ₹25,000 (varies by city).
- Experience: Min 2 years total work experience.
Personal Loan vs Credit Card Loan
Many borrowers confuse Personal Loans with Credit Card loans. Personal Loans are generally cheaper (10.5%–14%) compared to Credit Card revolving credit (36%–42%). Always choose a personal loan for large expenses like weddings or medical emergencies.
How This Personal Loan EMI Calculator Helps
Using a Personal Loan EMI Calculator before applying helps you validate affordability, avoid over-borrowing, and plan prepayments efficiently.
Assess Affordability
Ensure your EMI stays within 40–50% of your monthly take-home salary.
Choose the Right Tenure
Longer tenure lowers EMI but increases total interest paid over time.
Plan Smart Prepayments
Track outstanding balance reduction to plan foreclosure using bonuses or salary hikes.
Personal Loan EMI Formula
Banks calculate Personal Loan EMI using the standard reducing balance formula:
- P = Loan Amount (Principal)
- R = Monthly Interest Rate (Annual Rate ÷ 12 ÷ 100)
- N = Loan Tenure in Months
This Personal Loan calculator follows RBI-aligned EMI formulas used by Indian banks and NBFCs.
Key Advantages of a Personal Loan
- No Collateral Required: Your assets remain untouched.
- Quick Disbursal: Funds often credited within 24–48 hours.
- Flexible Usage: Weddings, travel, medical needs, or emergencies.
- Fixed Interest Rates: EMIs remain constant throughout the tenure.