What is EMI in a Personal Loan?
EMI is the fixed amount you pay every month to the bank or lender until your loan is fully repaid. It includes both:
- Principal (the loan amount you borrowed)
- Interest (the cost of borrowing from the lender)
The EMI remains the same throughout the tenure, but the ratio of interest and principal changes every month.
Formula to Calculate EMI
The standard formula to calculate EMI is: EMI=P×R×(1+R)N(1+R)N−1EMI = \frac{P \times R \times (1+R)^N}{(1+R)^N-1}EMI=(1+R)N−1P×R×(1+R)N
Where:
- P = Loan amount (₹15,00,000)
- R = Monthly interest rate (Annual Interest ÷ 12 ÷ 100)
- N = Loan tenure in months (5 years = 60 months)
EMI Calculation for ₹15 Lakh Loan for 5 Years
Let’s calculate with an example:
- Loan Amount (P) = ₹15,00,000
- Tenure (N) = 5 years (60 months)
- Interest Rate (average in India) = 10% per annum (0.10 ÷ 12 = 0.00833 monthly)
EMI=15,00,000×0.00833×(1+0.00833)60(1+0.00833)60−1EMI = \frac{15,00,000 \times 0.00833 \times (1+0.00833)^{60}}{(1+0.00833)^{60}-1}EMI=(1+0.00833)60−115,00,000×0.00833×(1+0.00833)60
EMI = ₹31,874 (approx.)
Total Payment Breakdown
- Monthly EMI = ₹31,874
- Total Payment in 5 Years (EMI × 60 months) = ₹19,12,440
- Total Interest Paid = ₹4,12,440
So, on a ₹15 lakh loan at 10% for 5 years, you will pay ₹4.12 lakh as interest.
EMI for Different Interest Rates (₹15 Lakh, 5 Years)
| Interest Rate | Monthly EMI | Total Interest | Total Payment |
|---|---|---|---|
| 8% | ₹30,418 | ₹3,25,080 | ₹18,25,080 |
| 10% | ₹31,874 | ₹4,12,440 | ₹19,12,440 |
| 12% | ₹33,374 | ₹5,02,440 | ₹20,02,440 |
| 14% | ₹34,916 | ₹5,94,960 | ₹20,94,960 |
Factors That Affect Your EMI
- Loan Amount – Higher loan = Higher EMI.
- Interest Rate – A small increase in interest changes your EMI significantly.
- Tenure – Longer tenure reduces EMI but increases total interest.
- Credit Score – Higher CIBIL score = Lower interest rate.
Tips to Manage Personal Loan EMI
- Compare lenders before applying.
- Choose a tenure that balances EMI and total interest.
- Prepay whenever you have extra funds to reduce interest.
- Maintain a strong credit score to negotiate better rates.
Final Thoughts
A ₹15 lakh personal loan for 5 years will cost you around ₹31,874 EMI every month at 10% interest. Always calculate your EMI before applying so you can manage your budget smartly. Compare different banks and NBFCs to get the best deal and repay on time to maintain a healthy credit score.
FAQs
1. How much EMI for ₹15 lakh personal loan for 5 years at 10%?
Around ₹31,874 per month.
2. Can I reduce my EMI after taking the loan?
Yes, by increasing tenure or part-prepayment.
3. Which bank offers the lowest interest rates in India?
Rates vary, but leading banks like SBI, HDFC, and ICICI offer competitive personal loan rates starting from 9% p.a.
4. What happens if I miss an EMI?
You’ll face late payment charges, penalty interest, and a drop in your CIBIL 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.