Calculate EMI, total interest, and amortization schedule for any personal loan. Compare 10 major Indian lenders and check affordability against your income.
EMI is 22.1% of your income - within the recommended 40% limit
You can comfortably afford this EMI of ₹16,607/month on your ₹75,000/month income. Most banks will approve this loan.
Your EMI: 22.1%Safe limit: 40%
Loan cost breakdown
Principal
₹5.00 L
Total interest
₹97,858
Total payable
₹5.98 L
Interest
19.6%
EMI split year by year
PrincipalInterest
Yr 1Yr 2Yr 3
In Year 1, 26% of your EMI goes to interest. By the final year, 94% goes to principal repayment.
How tenure affects EMI and total cost - ₹5.00 L at 12%
Tenure
Monthly EMI
Total interest
Total repayment
Interest saved vs 5yr
1yr
₹44,424
₹33,093
₹5.33 L
Save ₹1.34 L
1.5yr
₹30,491
₹48,838
₹5.49 L
Save ₹1.18 L
2yr
₹23,537
₹64,882
₹5.65 L
Save ₹1.02 L
3yr(yours)
₹16,607
₹97,858
₹5.98 L
Save ₹69,475
4yr
₹13,167
₹1.32 L
₹6.32 L
Save ₹35,321
5yr
₹11,122
₹1.67 L
₹6.67 L
Baseline
Shorter tenure means lower total interest but a higher monthly EMI. Pick the shortest tenure your income comfortably supports.
How rate affects cost - ₹5.00 L for 36 months
Interest rate
Monthly EMI
Total interest
Total repayment
10%
₹16,134
₹80,809
₹5.81 L
11%
₹16,369
₹89,297
₹5.89 L
12%(yours)
₹16,607
₹97,858
₹5.98 L
13%
₹16,847
₹1.06 L
₹6.06 L
14%
₹17,089
₹1.15 L
₹6.15 L
15%
₹17,333
₹1.24 L
₹6.24 L
18%
₹18,076
₹1.51 L
₹6.51 L
20%
₹18,582
₹1.69 L
₹6.69 L
24%
₹19,616
₹2.06 L
₹7.06 L
Personal loan rates - major Indian lenders (June 2026)
EMI calculated on ₹5.00 L for 36 months at minimum published rate
Lender
Rate range
EMI at min rate
Total interest at min
Notes
SBI Personal Loan
11.45% to 14.5%
₹16,476
₹93,140
Salaried central/state govt employees
HDFC Bank
10.5% to 24%
₹16,251
₹85,044
Pre-approved for salary account holders
ICICI Bank
10.75% to 19%
₹16,310
₹87,168
Quick disbursal, digital process
Axis Bank
10.49% to 22%
₹16,249
₹84,959
Competitive for CIBIL 750+
Kotak Mahindra
10.99% to 36%
₹16,367
₹89,212
Wide range based on profile
IndusInd Bank
10.49% to 31.5%
₹16,249
₹84,959
Self-employed eligible
Yes Bank
10.99% to 20%
₹16,367
₹89,212
Existing customers get better rates
Bajaj Finserv
11% to 35%
₹16,369
₹89,297
NBFC, fastest disbursal
Tata Capital
10.99% to 35%
₹16,367
₹89,212
Flexible repayment options
Moneyview / Digital
14% to 36%
₹17,089
₹1.15 L
Instant approval, smaller amounts
Rates are indicative for June 2026. Actual rate depends on your CIBIL score, employer category, income, existing relationship with the lender, and loan amount. Always compare formal sanction letters.
Full amortization schedule
Showing first 12 months
Month
Opening balance
EMI
Interest
Principal
Closing balance
1
₹5,00,000
₹16,607
₹5,000
₹11,607
₹4,88,393
2
₹4,88,393
₹16,607
₹4,884
₹11,723
₹4,76,670
3
₹4,76,670
₹16,607
₹4,767
₹11,840
₹4,64,829
4
₹4,64,829
₹16,607
₹4,648
₹11,959
₹4,52,870
5
₹4,52,870
₹16,607
₹4,529
₹12,078
₹4,40,792
6
₹4,40,792
₹16,607
₹4,408
₹12,199
₹4,28,593
7
₹4,28,593
₹16,607
₹4,286
₹12,321
₹4,16,271
8
₹4,16,271
₹16,607
₹4,163
₹12,444
₹4,03,827
9
₹4,03,827
₹16,607
₹4,038
₹12,569
₹3,91,258
10
₹3,91,258
₹16,607
₹3,913
₹12,695
₹3,78,563
11
₹3,78,563
₹16,607
₹3,786
₹12,822
₹3,65,742
12
₹3,65,742
₹16,607
₹3,657
₹12,950
₹3,52,792
Personal Loan in India - Complete Guide for 2026
A personal loan is an unsecured loan - you do not need to pledge any asset as collateral. The bank lends based on your income, CIBIL credit score, employment stability, and repayment track record. Because there is no collateral backing the loan, lenders charge significantly higher interest rates than secured products like home loans or car loans, typically ranging from 10.5% to 36% per annum in India as of mid-2026.
Personal loans are disbursed within hours to a few days, require minimal paperwork compared to secured loans, and can be used for virtually any purpose. This convenience comes at a cost - the total amount repaid on a personal loan is almost always significantly more than the amount borrowed, especially for longer tenures.
Understanding exactly how EMI is calculated, what drives your interest rate, and when a personal loan makes financial sense versus when it destroys wealth, is essential before signing any loan agreement. This guide covers all of it with real numbers.
How personal loan EMI is calculated - the formula explained
All regulated Indian lenders compute personal loan EMIs using the reducing balance method, also called the diminishing balance method. This is different from the flat rate method sometimes used in informal lending and some consumer finance schemes. Under the reducing balance method, interest is charged only on the outstanding principal after each payment - not on the original loan amount for the full tenure.
Personal loan EMI formula (reducing balance)
EMI = P x r x (1+r)^n divided by ((1+r)^n minus 1)
P = Principal loan amount | r = Annual rate / 12 / 100 | n = Tenure in months
Example: 5 lakh at 12% for 3 years
r = 12 / 12 / 100 = 0.01 per month
n = 3 x 12 = 36 months
(1.01)^36 = 1.4308
EMI = 5,00,000 x 0.01 x 1.4308 / (1.4308 - 1)
EMI = 7,150 / 0.4308 = 16,607 per month
Total paid = 16,607 x 36 = 5,97,852
Total interest = 97,852
Example: 2 lakh at 15% for 2 years
r = 15 / 12 / 100 = 0.01250 per month
n = 2 x 12 = 24 months
(1.0125)^24 = 1.3474
EMI = 2,00,000 x 0.0125 x 1.3474 / (1.3474 - 1)
EMI = 3,369 / 0.3474 = 9,697 per month
Total paid = 9,697 x 24 = 2,32,728
Total interest = 32,728
In both examples above, notice that the shorter tenure (2 years vs 3 years) costs less total interest even at a higher rate, because you are borrowing for a shorter period. Choosing the shortest tenure your budget supports is the single most effective strategy for reducing the total cost of a personal loan.
What determines your personal loan interest rate
Personal loan rates in India span an enormous range - from 10.49% to 36% per annum depending on the lender and borrower profile. Six factors drive where on this spectrum you land. Understanding each one lets you take targeted steps to improve your offer before applying.
📊CIBIL credit score
The single most important factor in personal loan pricing. A score of 750 or above puts you in the best rate bracket at most banks - typically 10.5 to 12% p.a. Scores between 700 and 749 attract a premium of 1 to 2.5%. Between 650 and 699, expect rates of 15 to 20% if approved at all by banks. Below 650, most scheduled commercial banks reject the application, and NBFCs charge 24 to 36%.
Action steps
+Check your CIBIL score free at cibil.com before applying
+Pay all EMIs and credit card bills on or before due date
+Keep credit card utilisation below 30% of your limit
+Avoid applying for multiple loans within 6 months
🏢Employer and employment type
Banks categorise employers into tiers. Central and state government employees, PSU employees, and employees of large MNCs listed on major indices get the lowest rates and highest approval odds. Private company employees get standard rates. Self-employed professionals and business owners pay 1 to 4% more and face stricter documentation requirements.
Action steps
+Government employees: SBI and Bank of Baroda offer the best rates
+MNC employees: HDFC Bank and ICICI Bank are often competitive
+Self-employed: LIC Housing and Bajaj Finserv are more flexible
+Stable employment for 2+ years with current employer helps
💰Net monthly income
Higher income signals lower default risk. Banks typically offer the best rates to borrowers earning above 75,000 to 1 lakh per month. Most banks set minimum income thresholds of 25,000 to 30,000 per month for personal loans. Your income also determines the maximum loan amount - most lenders cap personal loans at 10 to 15 times the monthly net income.
Action steps
+Include all documented income sources in the application
+Bonus and incentive income can sometimes be counted if consistent
+Rental income shown in ITR strengthens the application
+Spouse income can be included if applying jointly
⚖️Existing debt obligations (FOIR)
FOIR (Fixed Obligation to Income Ratio) is the percentage of your monthly income already committed to existing EMIs. Most banks cap total FOIR at 40 to 50% for personal loans. If your current EMIs already consume 35% of income, you can only borrow enough to keep the total below 50%. High existing debt also signals stress to the lender and may push the rate up.
Action steps
+Clear or prepay existing personal loans before applying
+Pay off credit card EMIs to reduce FOIR
+A lower FOIR means you can borrow more at a better rate
+Show closure certificates for recently paid-off loans
📅Loan amount and tenure
Larger loan amounts (5 lakh and above) sometimes attract marginally lower rates because the processing cost per rupee lent is lower. Very short tenures (under 12 months) and very long tenures (60 to 84 months) may carry higher rates than the 24 to 36 month sweet spot. Lenders price tenure risk into the rate for longer commitments.
Action steps
+Borrow only what you need - avoid topping up unnecessarily
+Opt for 24 to 36 months if possible for lowest effective rate
+Use the rate comparison table in the calculator above
+Avoid the maximum tenure unless cash flow is genuinely tight
🤝Relationship with the bank
Having your salary credited to the bank, holding a fixed deposit, or having an existing home loan with the lender often earns a rate concession of 0.25 to 0.5% and significantly faster approval. Many banks offer pre-approved personal loans to salary account holders that can be disbursed within hours via net banking without additional documentation.
Action steps
+Check your bank app for pre-approved personal loan offers first
+Salary account holders almost always get the best internal rate
+Existing home loan borrowers can often get PL at special rates
+A long-standing relationship (3+ years) improves negotiating position
How much personal loan can I get on my salary? - reference table 2026
The table below shows approximate personal loan eligibility at different salary levels, assuming 40% FOIR, no existing EMIs, and a CIBIL score above 750. Use the calculator above for your exact numbers with your current EMI obligations.
When a personal loan makes sense - and when it does not
A personal loan at 12 to 18% per annum is an expensive instrument. The decision to borrow should be made only after weighing whether the cost of borrowing is justified by the purpose. Below are the situations where a personal loan is the right call - and where it is a financial mistake.
Situations where borrowing makes sense
Medical emergency
Immediate healthcare cannot wait for savings to accumulate. Borrowing at 12% to avoid delayed treatment is always justified.
Consolidating higher-rate debt
Replacing a 36 to 40% credit card balance with a 14% personal loan saves real money every month. This is one of the clearest financial wins from a personal loan.
Home renovation or repair
Structural repairs or improvements that extend the life or value of your property are productive uses. A leaking roof fixed via a 15% personal loan is cheaper than the damage caused by delaying.
Education or skill development
A course, certification, or degree that demonstrably increases earning power within 12 to 24 months can justify borrowing. Model the expected salary increase against the total loan cost.
Wedding expenses (controlled amount)
A reasonable wedding budget repayable within 2 to 3 years from savings is manageable. The danger is over-borrowing for social pressure, which causes financial stress for years.
Situations where you should not borrow
Vacations and leisure travel
Paying 12 to 18% interest to fund a trip that generates zero financial return is a wealth destroyer. Save for 6 to 12 months and pay cash instead.
Investing in stocks or mutual funds
No equity investment reliably returns 15%+ per year net of taxes. Borrowing at 12% to invest in an uncertain-return asset creates negative expected value and amplifies losses.
Consumer electronics and gadgets
A phone or laptop is a depreciating asset worth 40 to 60% less in 2 years. Paying interest on a falling-value item means you are paying more for something that is worth less by the time you repay.
Business working capital
If the purpose is business-related, a business loan, MSME loan, or Mudra loan offers lower rates, longer tenure, and tax-deductible interest. A personal loan for business is using the wrong product.
Recurring monthly expenses
Borrowing to cover regular expenses like rent or groceries signals that spending exceeds income. A personal loan delays the problem without solving it, and adds interest on top.
Personal loan vs alternatives - which is cheaper?
Before taking a personal loan, compare it against every available alternative. In many situations, a different product provides the same cash with lower total cost.
Product
Typical rate (2026)
Secured?
Approval speed
Best for
Key watch-out
Personal loan
10.5% to 24%
No
Same day to 3 days
Emergencies, debt consolidation
Rate depends heavily on CIBIL
Credit card EMI
13% to 44%
No
Instant (existing card)
Small amounts under 50,000
Highest effective rate; APR often hidden
Gold loan
8% to 14%
Yes (gold)
30 minutes to same day
Quick cash with gold jewellery
Gold can be auctioned on default
Loan against FD
FD rate + 1 to 2%
Yes (fixed deposit)
Same day
If you have an FD; lowest effective cost
FD is frozen; interest accumulates on both
Loan against PF (EPF)
No interest (advance)
Yes (own money)
3 to 7 working days online
Medical, housing, marriage (eligible reasons)
Reduces retirement corpus permanently
Home loan top-up
8.5% to 9.5%
Yes (property)
3 to 7 days (existing borrower)
Home renovation; existing home loan borrowers
Extends total mortgage obligation
BNPL / fintech loan
0% to 36%
No
Instant approval
Small purchases at 0% (if genuinely 0%)
Hidden fees; penalty on late payment is high
Documents required for a personal loan in India
Documentation requirements vary by lender and borrower type but follow a standard framework. Having all documents ready before applying reduces processing time from days to hours for most banks.
Salaried employees
+Aadhaar card (KYC identity and address proof)
+PAN card (mandatory for loans above Rs 50,000)
+Last 3 months salary slips
+6 months bank statements (salary account)
+Form 16 or ITR for last 2 years
+Current employer appointment or offer letter
+Passport-size photographs
+Mobile number linked to Aadhaar (for e-KYC)
Self-employed professionals and businesspersons
+Aadhaar card and PAN card
+ITR with computation of income for last 2 to 3 years
+Proof of business vintage (3 years preferred by most banks)
Personal loan application process - step by step
The end-to-end process for a personal loan at a major bank takes anywhere from a few hours (pre-approved digital loans) to 5 to 7 working days for new-to-bank applicants. Understanding each stage helps you anticipate delays and prepare correctly.
1
Check your CIBIL score and pre-approved offers
Before applying anywhere, check your CIBIL score (free at cibil.com once per year, or anytime through BankBazaar, Paisabazaar, or your bank app). Check if your existing bank has a pre-approved personal loan offer in their mobile app - these are disbursed within hours with minimal documentation and are usually priced better than market rates for qualified borrowers.
2
Compare at least 3 lenders
Compare APR (Annual Percentage Rate, which includes processing fee and other charges in addition to the interest rate), foreclosure charges, and partial prepayment terms - not just the headline interest rate. A 12% loan with zero prepayment penalty may cost less total than an 11% loan with 4% foreclosure fee if you plan to prepay.
3
Submit application to one lender only
Apply to your strongest choice first. Every application triggers a hard inquiry on your CIBIL report, which temporarily reduces your score and is visible to other lenders. Multiple simultaneous applications signal desperation and reduce approval odds and rate offers at each institution.
4
Credit appraisal and verification
The bank verifies your income documents, CIBIL report, employment status, and references. For salaried applicants, the employer may be called for confirmation. For larger loan amounts (5 lakh and above), a field verification visit to your residence or workplace may be conducted. This stage takes 1 to 3 working days.
5
Sanction letter and agreement signing
If approved, you receive a formal sanction letter stating the approved amount, interest rate, tenure, EMI, processing fee, and all terms and conditions. Review the sanction letter carefully before signing, particularly the prepayment/foreclosure clause, late payment penalty, and insurance bundling (some lenders push credit life insurance; this is optional unless you specifically want it).
6
Disbursement
After agreement signing and document collection, the loan amount is credited to your bank account - usually on the same day or the next working day. Keep the sanction letter and repayment schedule safely. Set up auto-debit from your salary account on or before the EMI due date to avoid late payment penalties.
Check your home loan eligibility
See the maximum home loan you qualify for based on income, CIBIL score, and property value
Frequently asked questions about personal loans in India
What is the maximum personal loan amount I can get?▼
Most banks offer personal loans up to 40 to 50 lakh rupees for salaried individuals with strong CIBIL scores and clean repayment history. The actual amount is typically capped at 10 to 15 times your net monthly income. A borrower earning 1 lakh per month with a CIBIL score above 750 and no existing EMIs can generally get 10 to 15 lakh comfortably; a strong profile with multiple years at a large employer might qualify for 20 to 25 lakh. NBFCs and digital lenders cap lower (typically 5 to 10 lakh) but approve faster and with less documentation.
What is the minimum CIBIL score required for a personal loan?▼
Most scheduled commercial banks require a minimum CIBIL score of 700 to 720 for personal loan approval. A score of 750 or above earns the best published rates of 10.5 to 12% per annum. Scores between 680 and 719 may still get approved but at higher rates of 14 to 18%. Below 650, mainstream banks typically reject the application entirely. NBFCs and fintech lenders are more flexible with scores of 600 to 650 but charge rates of 20 to 36% to compensate for the higher default risk.
Can I foreclose a personal loan before the tenure ends?▼
Yes, most lenders allow foreclosure after a lock-in period of typically 6 to 12 months from the first EMI. Foreclosure charges for personal loans are typically 2 to 5% of the outstanding principal. Unlike home loans (where RBI bars prepayment penalties on floating rate loans), personal loans are almost always fixed rate, so foreclosure fees apply. Before foreclosing, calculate: total interest saved versus foreclosure fee. If you are foreclosing in the first third of the tenure, savings usually outweigh the fee. In the last third of the tenure, most of the interest is already paid and saving is minimal.
Does taking a personal loan hurt my CIBIL score?▼
A personal loan affects your CIBIL score in multiple ways over time. Applying triggers a hard inquiry (minus 5 to 10 points temporarily). The new loan increases your total outstanding debt, causing an initial score dip of 10 to 20 points. However, consistently paying EMIs on time every single month is the most powerful way to build your credit history. After 12 to 18 months of timely payments, a well-managed personal loan typically has a neutral to positive net effect on your CIBIL score. Missing even one payment causes a significant negative impact that takes 12 to 24 months of good behaviour to repair.
Is it better to use a credit card or a personal loan for large expenses?▼
For amounts under 50,000 that you can repay in full before the credit card statement due date, the credit card costs nothing (zero interest if paid in full). For any amount you cannot repay in full, or amounts above 50,000, a personal loan is almost always cheaper. Credit card EMI APR ranges from 15 to 44% per annum while personal loans from banks are 10 to 18%. On 1 lakh: credit card EMI at 36% for 12 months costs 20,400 in interest. A personal loan at 14% for 12 months costs 7,800 in interest. The saving is 12,600, or about 8.4% of the principal.
Is personal loan interest tax-deductible in India?▼
Personal loan interest is generally not deductible from income under the Income Tax Act because personal loans are unsecured and not tied to a specific eligible purpose. There are two exceptions worth knowing. First, if you use the loan proceeds specifically for business operations and can document this, the interest is deductible as a business expense under Section 37. Second, if the loan is used entirely for purchase or renovation of a residential property, the interest may qualify for deduction under Section 24(b) - up to 2 lakh per year for a self-occupied house, or the full interest for a let-out property. You need a clear paper trail linking the loan proceeds to the stated purpose.
Can I get a personal loan without a salary slip?▼
Salaried employees are expected to provide 3 months salary slips as primary income proof. If your salary is credited to a bank account but slips are unavailable (common in smaller firms), most banks will accept a bank statement showing regular salary credits plus a letter from the employer on company letterhead. Self-employed individuals substitute salary slips with ITR for the last 2 to 3 years, audited financials, and bank statements. Some digital lenders and fintechs offer paperless loans using bank account statement analysis via Account Aggregator, requiring only Aadhaar, PAN, and 6 months bank statement upload - though rates are typically 3 to 5% higher.
What happens if I cannot repay my personal loan EMI?▼
Missing an EMI immediately triggers a late payment fee (500 to 2,000 rupees) plus penal interest of 1 to 2% per month on the overdue amount. A missed payment is reported to all four credit bureaus (CIBIL, Experian, Equifax, CRIF High Mark) within 30 to 45 days, reducing your credit score significantly. After 3 consecutive missed EMIs (90 days overdue), the loan is classified as an NPA (Non-Performing Asset). For unsecured personal loans, banks typically initiate legal recovery through the Debt Recovery Tribunal or file a civil suit. Since there is no collateral, banks cannot seize assets without a court order. If you anticipate difficulty, contact your bank proactively and request EMI restructuring or a temporary moratorium before the account becomes stressed.
What is the difference between flat rate and reducing balance rate on a personal loan?▼
A flat rate personal loan charges interest on the original loan amount for the entire tenure, regardless of how much you have repaid. A reducing balance loan (which all RBI-regulated banks use) charges interest only on the outstanding principal, which decreases each month as you repay. A 12% flat rate is equivalent to approximately 21 to 22% effective annual rate on a reducing balance basis for a 36-month loan - almost double the advertised number. Consumer durable store loans and some NBFC schemes may quote flat rates. Always ask your lender which method applies and verify using the EMI formula or our calculator above.
