The Real Problem This Solves
Personal loans hide their true cost behind a friendly "flat rate." A 10% flat rate can mean an effective rate near 18% once you account for how repayment works.
Add the processing fee that's deducted upfront, and the money you actually receive is less than you borrowed. This calculator exposes the real cost.
How the Real Cost Adds Up
Personal loans are unsecured, so rates run high, typically 10.5% to 24%, depending on your credit score. The EMI uses the standard reducing-balance formula, but watch the upfront fee.
Example: Priya borrows ₹5 lakh at 12% for 3 years. Her EMI is about ₹16,607. But the bank charges a 2% processing fee (₹10,000), so she actually receives ₹4.9 lakh while repaying on the full ₹5 lakh. Over 3 years she pays around ₹97,852 in interest on top of that fee.
| Loan & Rate | Tenure | Monthly EMI | Total Interest |
|---|---|---|---|
| ₹5L @ 12% | 3 years | ₹16,607 | ₹97,852 |
| ₹5L @ 12% | 5 years | ₹11,122 | ₹1.67 lakh |
| ₹5L @ 18% | 3 years | ₹18,076 | ₹1.51 lakh |
Frequently Asked Questions
Why is my personal loan rate so high?
Personal loans need no collateral, so lenders price in higher risk. Your exact rate depends heavily on your CIBIL score: above 750 gets the best rates, below 650 gets rejected or charged 20%+.
What is the foreclosure penalty?
Most banks charge 2%-6% of the outstanding principal if you close the loan early. Always check this before signing, especially if you expect a bonus or windfall.
Does a longer tenure help?
It lowers your monthly EMI but increases total interest substantially. Borrow for the shortest tenure your budget can handle.
Related Calculators
Before you apply, know your realistic sanction
Banks compute your eligibility two ways and approve the lower figure. Check what you'll actually get — adjusted for your CIBIL score band — before a rejected application dents your credit report.
Check Personal Loan Eligibility →