1. What is the Personal Loan Payment Formula?

The personal loan payment formula calculates the fixed monthly payment required to repay a loan over a specified term. It accounts for the principal amount, interest rate, and loan duration to determine affordable monthly installments.

2. How Does the Calculator Work?

The calculator uses the loan payment formula:

Where:

• \( PMT \) — Monthly payment (INR)
• \( PV \) — Loan principal amount (INR)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of payments (loan term in years × 12)

Explanation: The formula calculates the fixed payment needed each month to pay off the loan with interest by the end of the term.

3. Importance of Loan Calculation

Details: Accurate loan payment calculation helps borrowers understand their financial commitments, compare loan offers, and budget effectively for EMI payments.

4. Using the Calculator

Tips: Enter loan amount in INR, annual interest rate in percentage, and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical interest rate for personal loans in India?
A: Rates typically range from 10% to 24% per annum depending on credit score, lender, and loan amount.

Q2: How does loan tenure affect EMI?
A: Longer tenures reduce EMI but increase total interest paid. Shorter tenures have higher EMIs but lower total interest.

Q3: Are there prepayment charges on personal loans?
A: Many Indian lenders charge 2-5% of outstanding amount for prepayment, though some offer free prepayment options.

Q4: What factors affect personal loan eligibility?
A: Credit score, income, employment stability, existing debts, and relationship with lender affect approval and rates.

Q5: How can I reduce my personal loan interest?
A: Maintain good credit score, negotiate with lenders, opt for shorter tenure, or consider balance transfers to lower-rate loans.