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The standard EMI formula on a reducing balance loan is: EMI = P × r × (1+r)^n / ((1+r)^n − 1). P is your principal, r is the monthly interest rate (annual rate divided by 12, then by 100), and n is the number of monthly instalments. Quick example: borrow ₹5 lakh at 11% for 5 years. r = 0.00917, n = 60. The EMI works out to about ₹10,871. Multiply that by 60 and you've paid about ₹6.52 lakh in total — so ₹1.52 lakh is interest. The calculator does this in one click.

A flat rate loan charges interest on the full original principal for the entire tenure — even after you've repaid most of it. A reducing balance loan calculates interest on the outstanding amount, which keeps shrinking. That's a huge gap. A 10% flat rate is roughly equivalent to a 17-19% reducing rate. So if a lender quotes you a flat rate that "looks lower," do the conversion before signing. Reducing balance is the standard for home, auto, and most personal loans now. Always confirm which method is being used, especially with smaller lenders.

As a working rule, banks lend you somewhere between 40 to 60 times your monthly net income for a personal loan, and around 60 times for a home loan. So if you take home ₹70,000 a month, you can typically get a personal loan of ₹15-25 lakh and a home loan of around ₹40-50 lakh. They also check your existing EMIs — total EMIs (including the new one) usually shouldn't cross 50% of your income. Credit score, employer category, and age all move the number too. Our calculator gives a quick estimate.

Longer tenure means lower EMI but far higher total interest paid. Take a ₹10 lakh loan at 11%. Over 5 years your EMI is around ₹21,742 and total interest about ₹3.04 lakh. Stretch it to 10 years and the EMI drops to ₹13,775 — but total interest balloons to nearly ₹6.53 lakh. So you've doubled the tenure and more than doubled the interest. The tenure trade-off is one of the most underestimated decisions in lending. Pick the shortest tenure your monthly budget can handle without strain. Use the calculator to compare side by side.

Total interest on a personal loan is simply: (EMI × number of months) − principal. Borrow ₹3 lakh at 13% for 3 years and your EMI is roughly ₹10,107. Multiply by 36 months: ₹3,63,852. Subtract the original ₹3 lakh and you've paid about ₹63,852 as interest. That's the actual cost of your loan. Personal loans usually carry the highest rates after credit cards, so always cross-check with two or three lenders. Processing fees of 1-3% add to the cost, so factor those in when comparing offers.

Prepaying part of your loan reduces the outstanding principal, which directly cuts the interest you pay going forward. You usually have two choices: keep the EMI same and reduce the tenure, or keep the tenure same and reduce the EMI. The first option saves a lot more interest. On floating-rate home loans in India, RBI rules prevent banks from charging prepayment penalties. Personal and auto loans may attract a 2-4% charge — check the agreement. Even a one-time prepayment of two or three EMIs a year compounds into significant savings.

Don't compare just the interest rate — that's the trap. Add up everything: processing fees, documentation charges, insurance bundling, and any prepayment penalties. The honest number to compare is APR (annual percentage rate), which folds fees into an effective rate. Also check whether the rate is fixed or floating, and the prepayment clauses. Sometimes a loan at 11.5% with zero processing fee beats one at 11% with a 2% fee — especially on shorter tenures. Run both offers through the calculator with their actual fees before deciding. The lower-rate option isn't automatically the cheaper one.