Know how to calculate interest on your personal loan

2 min read

Using this formula, you can learn how interest is calculated on personal loans.

EMI = P x r x (1+r) ^ n / {(1+r) ^ n-1}

In the above formula,

P = The principal amount

R = The applicable interest rate

N = Tenure (in months)

Use the following example to understand how EMI is calculated on your personal loan.

Presume you’ve borrowed Rs. 10 lakh as a personal loan with a tenure of 48 months (4 years) and at an interest rate of 13%. This is how your EMI will be calculated:

P = Rs. 10,00,000

R = 13%

N = 48 months

EMI = 10,00,000 x 13 x (1+13)^48 / {(1+13)^48-1}


  • The total payable amount of this personal loan is Rs. 10,00,000 + Rs. 26,827* 48 months = Rs. 12,87,696.
  • The principal loan amount is Rs. 10 lakh
  • The interest to be paid is Rs. 2,87,696.

Factors that affect interest rate on your personal loan

Your personal loan interest rate is dependent on various factors such as:

Credit score or CIBIL score

CIBIL score determines the creditworthiness of a borrower. Therefore, a good credit score can help you avail of a sizeable loan with affordable interest rates.

Monthly income

Your monthly income is yet another deciding factor when determining the interest rate on your personal loan.

Loan amount

A good CIBIL score and repayment history will improve your chances of getting a substantial amount with a reasonable interest rate.

If you are an applicant with a robust credit score, have repaid your previous loans on time, and have a good monthly income, you can easily qualify for a personal loan.

Bajaj Finserv offers personal loans that come with attractive interest rates and quick disbursal within 24 hours* of approval. Use our online EMI calculator and know your loan EMI and interest rate in a few minutes.

*Terms and Conditions apply

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