In today’s time, personal loans have become a convenient solution for many financial needs. Be it wedding expenses, home renovation, or children’s education—there are moments when arranging a large amount of money instantly becomes difficult. In such cases, banks and NBFCs offer personal loans, which are generally unsecured and easy to avail. However, before applying, it is important to calculate how much EMI you will need to pay every month and how much total interest you will repay over the loan tenure.
Interest Rate on Personal Loan
The interest rate on personal loans usually ranges between 10% to 16% annually, depending on the lender and the applicant’s financial profile. For this calculation, we are considering an 11% annual rate with a 5-year (60-month) repayment period.
EMI Calculation for ₹9 Lakh Loan
Suppose you take a loan of ₹9 lakh from a bank at 11% annual interest for a tenure of 5 years. The EMI details will look like this:
| Loan Amount (₹) | Interest Rate (%) | Tenure (Years) | EMI Per Month (₹) | Total Interest (₹) | Total Repayment (₹) |
|---|---|---|---|---|---|
| 9,00,000 | 11 | 5 | 19,565 | 2,73,924 | 11,73,924 |
This means your monthly EMI will be approximately ₹19,565. Over 5 years, the total repayment will be around ₹11.73 lakh, out of which ₹2.73 lakh will go towards interest only.
Why It’s Important to Understand EMI & Repayment
Many people opt for a loan quickly but later feel burdened by the EMI. Ideally, your EMI should not exceed 40% of your monthly income. Before finalizing, you should assess your salary, household expenses, and future savings goals.
How to Adjust EMI Amount
- Extend the tenure: Reduces monthly EMI but increases overall interest.
- Shorten the tenure: Increases EMI but saves significantly on interest.
Thus, choosing the right EMI structure depends on your income and repayment capacity.
Benefits and Precautions of Personal Loans
- No collateral or security is required.
- Quick processing with direct credit to your account.
- However, the interest rate is higher compared to home loans or car loans.
That’s why planning repayment before availing a personal loan is crucial.
Conclusion
If you borrow ₹9 lakh for 5 years at 11% interest, your EMI will be about ₹19,565 per month. The total repayment will be ₹11.73 lakh, including ₹2.73 lakh as interest. Taking a personal loan makes sense only when you clearly understand your repayment capacity and financial stability.
Disclaimer
This article is for informational purposes only. The figures here are based on an average 11% interest rate. Actual loan terms may vary depending on the bank or NBFC. Always check the exact interest rate, terms, and conditions before taking a loan, and evaluate your repayment ability carefully.