What is a Loan and What is an EMI? 

In banking, a loan is a process of lending money by one or more persons, or other entities to other individuals, organizations, or entities. The borrower incurs a debt (Debt is an amount of money borrowed by one party from another) and is usually required to pay an interest rate on that borrowed amount until the said amount is repaid, as well as to repay the principal amount borrowed. 

What is a Personal Loan? 

A Personal Loan may be defined as a short to a medium-term unsecured loan, that doesn’t need any collateral/security for disbursal. They’re usually disbursed in a few hours to some days with a token or no paperwork at all. A flexible end-use is the unique selling point of Personal Loans. Thus, this unsecured loan is meant to meet a range of wants starting from emergency medical expenses to planned expenditures like home renovation, wedding, etc. 


The term EMI is short for Equated Monthly Instalment. An equated monthly instalment (EMI) is defined as the quantity that a loan receiver pays monthly to a lender so as to repay the money borrowed. There’s a specific date every month by which the EMI ought to be paid by the receiver. The loan quantity and the accumulated interest is split equally over an amount and you’ll be able to simply calculate this final quantity with an EMI calculator. The amount of equated monthly instalments is equal to the number of months within the loan reimbursement tenure. 

EMIs are a good choice as you can pay the loaned amount back in sections and this thus reduces the financial pressure on you. The EMI style is recommended as it may be not be easy for everyone to repay a lump sum amount of money all at once especially in case of large amount such as home loans. Therefore, EMIs are the simplest bet as you’ll be able to pay in parts over the loan length and repay the quantity borrowed fully. EMIs provides a broad section of society the choice to fulfil their dreams of affording high-priced things, like a home, car, etc., which they wouldn’t have been able to get if they required to do all the payments promptly. With the help of an EMI calculator, you’ll be able to simply decipher your loan EMI demand and set up your monthly budget consequently. You’ve got the choice to come to a decision of the amount that you are required to pay off monthly and therefore the length that you want to form the payments relying upon your financial gain and money stability. 

EMI payments contribute towards the loan amount and increased interest on the loan quantity. The initial EMI payments contribute additionally towards the interest element of the loan and this procedure is termed as front loading. In the later stages of the loan tenure, the main contribution of the EMI goes towards reimbursement of the loan principal.  

Commonly, EMIs are set and therefore the recipient needs to pay set (fixed) monthly instalments to satisfy the loan quantity. But, the loan EMIs will vary in the case of floating charge per unit loans and prepayments. The quantity of your monthly EMI depends on all the factors referring to your loan. You’ll calculate the EMI applicable to your loan applying the formula for EMI. But, applying the formula isn’t a simple task and involves sophisticated calculations. Rather, choosing an EMI calculator could be a more sensible choice because it determines EMIs in a matter of seconds of your input.  

A personal loan is an unsecured loan that does not require you to submit any collateral or an equivalent. It is given for various uses like wedding, education, medical emergency, travel, home renovation, etc. Both salaried and freelance can apply for this type of loan. The loan comes with engaging interest rates and versatile reimbursement choices. You’ll be able to either apply on-line or at the branch of the bank or non-banking financial company (NBFC). You may additionally have to be compelled to pay the processing fee at applicable rates. The investor can assess the loan eligibility supported your financial gain, credit score and reimbursement potential. 

What is a Loan EMI Calculator? 

A personal loan EMI calculator helps you to calculate your monthly EMI of a potential loan with varying interest and get an understanding of the tentative EMI (Equated Monthly Installment) schedule, all online! Thus, helping you plan and manage your finances much better. 

A Personal Loan EMI Calculator helps you get an estimate of the EMI amount that you will be required to pay off every month, on taking a personal loan from HDFC. 

The calculator will then show you your monthly EMI amount for the personal loan. You will also be able to see a comprehensive break-down of the total payable amount. followed 

How an EMI Calculator Functions? 

An EMI calculator does its work on the basis of a few parameters. They are: 

  • Loan Amount: This refers to the personal loan principal borrowed from any bank. Generally, a higher loan amount results in higher EMI, if the interest rate and tenure are kept constant. 

Fincity offers personal loan for amounts as low as Rs. 50,000 and as high as Rs. 50 lakhs. 

  • Loan Tenure:  Loan tenure is the duration over which a personal loan is repaid. For a personal loan, the tenure currently varies from 12 to 72 months. In practice, a shorter tenure results in higher EMIs, but helps you save on the total interest payout of the loan.  
  • Interest Rate:  Generally, personal loan interest rate ranges from 10.75% to 21.25% p.a. A higher rate of interest typically leads to higher EMI pay-outs over the loan tenure. 

Amortization Table

The EMI that you are needed to pay has two parts – the principal component and the interest. At the repayment schedule’s beginning, a major part of it goes towards the repayment of interest. But the interest also keeps reducing gradually, as the principal component goes up. 

TimeEMI for 12 MonthsAnnual InterestPrincipal per AnnumClosing Balance
1. Rs. 4,00,400 Rs. 1,67,465 Rs. 2,32,935 Rs. 12,67,065 
2. Rs. 4,00,400 Rs. 1,37,923 Rs. 2,62,477 Rs. 10,04,587 
3. Rs. 4,00,400 Rs. 1,04,634 Rs. 2,95,766 Rs. 7,08,821 
4. Rs. 4,00,400 Rs. 67,123 Rs. 3,33,277 Rs. 3,75,544 
5. Rs. 4,00,400 Rs. 24,856 Rs. 3,75,544 Rs. 0 

Methods for Interest Calculation on Personal Loan 

There are 2 ways in which Personal Loan Interest Rates are calculated – Flat Rate and Reducing Balance Interest Rate 

Diminishing charge per unit or reducing charge per unit is applicable to the outstanding loan balance once payment of every EMI is done. 

A. Flat Rate Method:  According to this methodology, an individual is charged a rate of interest on the entire loan quantity when initially borrowed. As a result, the EMI quantity remains constant throughout the loan tenure. The formula that supports this method of EMI calculation is as given below: 

EMI Calculation by Flat Rate Method = (Principal + Interest) / Loan Duration in Months 

Example: Mr. Y availed a loan of Rs. 10 lakhs at a flat rate of interest of 12% for a period of 36 months. 

i.e., Interest for 1-year is 12% of Principal i.e., 12% of Rs.10 lakhs which is Rs.1,20,000 

Thus, interest for 3 years equals to 3 * Rs.1,20,000 = Rs.3,60,000 

EMI = (Rs.10 lakhs + Rs.3,60,000) / 36 = Rs.30,778 

B. Reducing Balance Method:  

In this technique, interest is charged solely on the outstanding loan principal and not the full quantity at first borrowed. Hence, this technique permits you to save a lot on the interest part of the loan. The formula that supports this method of EMI calculation is as given below: 

P multiplied by R multiplied by (1+R) ^ n divided by [(1+R) ^ n-1] 

P = Principal figure of the loan 

R = Interest Rate 

N = Number of instalments per month. 

The above-mentioned terms, along with some additional fees, in this case, the processing fee are needed to determine your EMI. 

For example, suppose you have opted for a personal loan of Rs. 20 lakhs for 2 years at an interest of 20 % p.a. 

Initially, we need to convert the interest rate per annum into a monthly rate and the tenure into months. 

To be able to calculate the rate of interest per month, we have to divide the annual interest rate by the number of months in a year, so monthly 20/12 = 1.66% per month 

The loan tenure of 2 years must also be converted into months before taking it into consideration into the formula i.e., 24 months 

 Now we have the three different terms with us which we can integrate into the formula as follows: 

EMI = [20,00,000 x 1.66 / 100 x (1 + 1.66 / 100) ^ 24 / [(1 + 1.66 / 100) ^ 24 – 1) 

EMI = Rs.1,00,179 

How to Use EMI Calculator? 

Our EMI Calculator is very easy to use, intuitive to understand and is quick to perform, mainly because of the fact that it is filled with colourful charts and instant results. You can easily calculate EMI for personal loan or any other fully amortizing loan using this calculator, in just a few clicks! 

Just enter a few basic details, like Amount, Interest Rate etc, and the system will automatically calculate and display an elaborate table depicting the break-up of total payment. It also displays the percentage of total interest and principal amount in the sum total of all payments made against the loan taken. The payment schedule table showing payments made every month / year for the entire loan duration is displayed along with a chart showing interest and principal components paid each year. A portion of each payment is for the interest while the remaining amount is applied towards the principal balance. During initial loan period, a large portion of each payment is devoted to interest. With passage of time, larger portions pay down the principal. The payment schedule also shows the intermediate outstanding balance for each year which will be carried over to the next year. 

If you wish to calculate how much loan you can afford OR determine advertised vs actual loan interest rate (along with loan APR) on a purchase, use our loan calculator. 

Fincity Personal Loan EMI Calculator Benefits  

 The idea of how much the borrower needs to pay towards their loan is, by far, the most important feature benefit of an EMI calculator.  This helps them to avoid paying above their capacity in the long run that they do not end up straining themselves in financial distress. This Loan EMI calculator helps the borrower decide on an EMI amount which can be repaid without much trouble over the tenure of the loan.  

There are a multitude of other advantages of EMI calculators, they are:  

Anytime Access  

 The calculator can be accessed anytime and anywhere. You can use the calculator multiple times, for 0 charge, and any number of times whenever you please. You do not have to go to the bank branch or lose yourself with the dilemma of figuring out complex and substantial mathematical calculations; instead, all you have to do is just access the internet and use the EMI calculator.  

Accurate Results  

Doing calculations manually comes with the potential risk of making mistakes. Further, more mistakes can be made by repeatedly doing the same calculations and this leads to further erroneous results. Also, when you calculate EMIs personally on loans offered by different banks, the chances of errors increase further. Thus, the online EMI calculator aids you in making error-free calculations at the click of a button!  

Saves you the time on complex calculations  

 The process of comparing the loans offered by different providers can often become very boring and time-consuming as you are using the same formula over and over again. By hand, you will be forced to spend long hours to calculate loans and thier respective EMIs. However, with this online tool, you have the advantage of saving your important time and complete all the lengthy and boring calculations in seco2q1nds. That being said, you can try out as many combinations for amount, tenure and rates of interest which you want to from the convenience of your home.  

 Aids the Financial Planning Process  

 While calculating the EMI for a loan, you should know the amount which you will have to pay when you take up a loan of the said amount, the tenure and also the interest rate. This will aid you in planning your finances prior to taking the loan so that your monthly budget does not take bear the burden! Another thing you can do is vary the parameters of the loan so as to reach the most suitable EMI as per your requirements.  

 An EMI calculator can be used for every loan  

Calculating loan EMIs never was this simple! You can deploy various calculators for different types of loans, be it one for home, vehicle or education. Even though the criterion for every loan is vastly similar, there can be situations where you will feel the need to use loan specific EMI calculators. To be on the safer side of calculations, use a specific calculator for specific loan types.  

 Bonus Advantage!  

 You can also negotiate a bit on the rate with the loan provider. It just might work. 

How to Get Low Interest Rate on Personal Loan? 

Follow the below-mentioned tips to get low interest rate on your personal loan: 

  • A high credit score ought to be maintained. 
  • A low credit utilization ratio should be kept. 
  • Also maintain a low FOIR (fixed obligation to income ratio). 
  • Do not apply for a personal loan with multiple lenders simultaneously. 
  • It is advantageous to opt for your personal loan from a bank/NBFC with which you already have a relationship, such as having a savings account or a fixed deposit. 

Generally, banks offer loan at a lower rate of interest than non-banking financial corporations (NBFCs). However, the eligibility criteria for private loans from banks is usually additional demanding than that of NBFCs. 


I hereby declare that I have read the consent. and I appoint and allow FINCITY to access my credit information from Credit Information Companies in order to understand my creditworthiness and thereinafter provide personalized values that would help them generate the Credit Information Report, Credit Score, and Credit Analysis. I/We hereby authorize FINCITY & its affiliates including banking partners to call or SMS and/or WhatsApp with reference to my application or in relation to any of FINCITY products, notwithstanding anything to the contrary that may be contained anywhere, including any registration for DNC/ NDNC.

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