What is Personal Loan EMI?
A Personal Loan EMI is the fixed monthly amount you pay to the bank or lender, which includes both principal and interest. The EMI amount remains constant throughout the tenure, making it easier to plan your monthly expenses.
Factors That Affect Your EMI for a ₹10 Lakh Loan
When you borrow ₹10 Lakh for 5 years, your EMI isn’t the same for everyone. Here are the major factors that influence it:
- Interest Rate:
The biggest factor. Even a 1% difference in interest rate can change your EMI significantly. - Loan Tenure (5 Years in this case):
A longer tenure means smaller EMIs but higher total interest outgo. - Lender’s Policies:
Each bank or NBFC may have different rates and charges. - Your Credit Score:
A high credit score often results in lower interest rates and better EMI terms.
EMI Calculation Formula
The standard EMI formula is:
EMI = [P x R x (1+R)^N] / [(1+R)^N – 1]
Where:
- P = Loan amount (₹10,00,000)
- R = Monthly interest rate (Annual Rate/12/100)
- N = Loan tenure in months (5 years = 60 months)
Instead of manual calculations, you can use a Personal Loan EMI Calculator to get exact figures in seconds.
Example: EMI for a ₹10 Lakh Loan for 5 Years
If the interest rate is around 10% per annum, then:
- Loan Amount = ₹10,00,000
- Tenure = 60 months
- EMI ≈ ₹21,000–₹22,000 (depending on the lender)
This means you’ll repay roughly ₹12.6–₹13.2 Lakh in total over 5 years, including interest.
How to Reduce EMI on a ₹10 Lakh Personal Loan
Here are some smart ways to manage and reduce your EMI burden:
- Negotiate for Lower Interest Rates: Compare lenders before applying.
- Choose a Longer Tenure: EMIs get smaller, but interest cost increases.
- Make Part Prepayments: Reduces outstanding principal and EMI.
- Maintain a High Credit Score: Lenders reward good credit with better terms.
- Balance Transfer Option: Switch to a lender with lower rates.
Benefits of Knowing Your EMI in Advance
- Helps you plan your monthly budget.
- Avoids the risk of loan default.
- Lets you compare lenders effectively.
- Provides a clear repayment roadmap.
Final Thoughts
A ₹10 Lakh personal loan for 5 years can be a smart financial move if planned well. Always calculate your EMI in advance, compare interest rates, and pick a repayment plan that suits your budget. With proper planning, you can repay comfortably without straining your finances.
FAQs
1. What will be the EMI for a ₹10 Lakh personal loan for 5 years?
It depends on the interest rate, but on average, it ranges between ₹21,000–₹22,000 per month.
2. Can I reduce my EMI after taking a loan?
Yes, by opting for part-prepayments, balance transfer, or loan restructuring.
3. Does credit score affect personal loan EMI?
Yes, a higher score often means lower interest rates, which reduces EMI.
4. Which bank gives the lowest EMI for a ₹10 Lakh loan?
It varies, so always compare offers from multiple banks and NBFCs before choosing.
5. What happens if I miss an EMI?
Missing EMI payments leads to penalties, higher interest, and a negative impact on your credit score.
Disclaimer: This article is for general information only. The interest rates and terms mentioned in it depend on the policies of the bank and NBFC. These may change from time to time. Before taking any type of loan, get complete information from your bank.