How this calculator works
Personal loan EMIs are calculated on a reducing balance basis, the standard method used by Indian banks and NBFCs. Each EMI is the same fixed amount every month, but the split between interest and principal changes over time — early EMIs are interest-heavy, later ones are principal-heavy.
The formula: monthly rate r = annual rate ÷ 12 ÷ 100; number of instalments n = years × 12; then
EMI = P × r × (1+r)n / ((1+r)n − 1)
Total payment over the loan = EMI × n. Total interest = Total payment − Principal.
Why personal loans cost more than secured loans
A personal loan is unsecured — you don't pledge any collateral like a house, car, or gold. That means if you default, the lender has no asset to recover, so they price in more risk with a higher interest rate compared to secured loans such as home loans, car loans, or gold loans. In exchange, personal loans are usually faster to disburse and don't require you to own an asset to pledge.
The 14% rate and 3-year tenure shown by default are typical personal loan parameters, not a quote from any specific lender. Always enter the actual rate and tenure offered to you before relying on the numbers.
Shunya doesn't offer personal loans — this is a general-purpose calculator. If you're a founder looking for GST, ROC, or tax compliance help, our CA team can take it from here.
Talk to a CA →How is personal loan EMI calculated?
EMI is calculated using the standard reducing-balance formula: EMI = P × r × (1+r)^n / ((1+r)^n − 1), where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12 ÷ 100), and n is the number of monthly instalments. Each EMI covers both interest and a portion of the principal, with the interest portion shrinking over time.
Why are personal loan rates higher than home loans?
Personal loans are unsecured — there's no collateral backing the loan, so lenders price in more risk with a higher interest rate. Home loans, car loans, and gold loans are secured against an asset, which typically gets you a lower rate.
What tenure is typical for a personal loan?
Personal loan tenures are usually shorter than secured loans, commonly ranging from 1 to 5 years. A shorter tenure means a higher EMI but less total interest paid; a longer tenure lowers the EMI but increases total interest.
Does my credit score affect the interest rate?
Yes, generally — a higher credit score typically gets you a better (lower) interest rate from lenders, since it signals lower repayment risk. This calculator simply computes the EMI for whatever rate you enter; it doesn't estimate what rate you'll actually be offered.
This tool is for quick estimation only and is not a substitute for professional financial or tax advice. For your specific situation, consult a practicing CA.
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