At some point in life, everyone faces a financial need that cannot wait be it a wedding, a medical emergency, or setting up a new venture. A personal loan can be the helping hand in such situations, offering quick funds without the need to mortgage property or pledge assets. But before you borrow, one key question remains how much EMI will you actually have to pay each month? Let’s understand that in a simple and practical way.
What Is a Personal Loan?
A personal loan is an unsecured form of credit offered by banks and financial institutions that allows you to borrow money and repay it in fixed monthly instalments, known as EMIs. Since no collateral is required, approval is faster though the interest rate depends largely on your credit score, income, and repayment history.
Currently, most banks in India offer personal loans with annual interest rates ranging from 10.5% to 15%, and repayment tenures between 1 to 5 years.
EMI Calculation for ₹10 Lakh Loan
Here’s an easy-to-understand breakdown of how much EMI you’ll need to pay for a ₹10 lakh loan at different interest rates and repayment periods.
| Loan Amount | Tenure | Interest Rate | Monthly EMI | Total Interest | Total Payable Amount |
|---|---|---|---|---|---|
| ₹10,00,000 | 3 Years | 10.5% | ₹32,581 | ₹1,73,242 | ₹11,73,242 |
| ₹10,00,000 | 4 Years | 11% | ₹25,836 | ₹2,39,974 | ₹12,39,974 |
| ₹10,00,000 | 5 Years | 12% | ₹22,326 | ₹3,34,670 | ₹13,34,670 |
As seen above, a shorter tenure (3 years) results in a higher EMI but lower total interest, while a longer tenure (5 years) offers smaller monthly payments at the cost of paying more interest overall.
Importance of a Good CIBIL Score
Your CIBIL score reflects your creditworthiness and repayment discipline. A score above 750 usually qualifies you for better interest rates and easier loan approval. Borrowers with lower scores can still get loans, but at higher rates.
For example, if two applicants apply for the same ₹10 lakh loan one with a score of 780 and the other with 660 the one with the higher score might get an interest rate of 10.5%, while the other could be charged 13%. This small difference can lead to paying around ₹70,000 more in total interest.
Factors to Consider Before Taking a Loan
- Compare interest rates across banks and NBFCs
- Choose a tenure that balances EMI affordability and total interest
- Maintain a good credit score for better offers
- Avoid over-borrowing; borrow only what you truly need
- Check for hidden charges or prepayment penalties
Final Verdict
A personal loan can be a reliable financial cushion during emergencies or big life events. For a ₹10 lakh loan, your EMI may range between ₹22,000 and ₹33,000 depending on the interest rate and tenure you choose. Always assess your repayment capacity, maintain a healthy CIBIL score, and select the most suitable offer to ensure your loan journey stays stress-free. Borrow responsibly, and your loan can turn into an opportunity not a burden.
Disclaimer
This article is for educational and informational purposes only. Loan terms, EMIs, and interest rates may differ among banks and change over time. Readers are advised to verify details with official bank sources or certified financial advisors before making any loan-related decision.
