The rate and tenure change the EMI on a Rs. 2 lakh loan, while the processing fee does not. A higher rate raises the EMI, and a longer tenure lowers it but adds total interest.
The processing fee is charged once, so add it to the interest when you compare the total cost.
Worked example: Mehul in Udaipur
Mehul is 31 and works as a salaried hotel sales manager in Udaipur. He earns Rs. 55,000 a month and has a CIBIL score of 753. He borrows Rs. 2 lakh to furnish his new flat, at an illustrative 15% per annum, and compares 2 tenures.
EMI = P × R × (1 + R)^N ÷ [(1 + R)^N − 1]. P is the loan amount in rupees, R is the annual rate divided by 12 and by 100, and N is the tenure in months. The formula spreads the principal and interest into equal monthly payments, so early EMIs carry more interest and later ones more principal. All figures are rounded to the nearest rupee.
| Tenure | Monthly EMI (Rs.) | Total interest (Rs.) | EMI as share of salary (%) |
|---|
| 36 months (3 years) | 6,933 | 49,590 | 12.6 |
| 48 months (4 years) | 5,566 | 67,175 | 10.1 |
Last updated: 21st October, 2026
The 48-month option lowers the EMI by Rs. 1,367 but adds Rs. 17,585 in interest. The processing fee on Rs. 2 lakh is up to Rs. 8,260. Mehul picks 36 months (3 years), since the EMI stays under 13% of his salary.
What can delay approval: a CIBIL score below 650 or existing EMIs that take up a large share of your income. Names or addresses that do not match across documents, and more than one loan application in the same month, can also slow it down.
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