Whenever you apply for a Loan at a bank, they charge you an amount, generally a percentage of the principal you pay. Borrowers tend to choose a bank that would provide competitive interest rates. It is, after all, one of the most important factors when availing of Loans and other types of borrowings. 

Banks usually charge a Personal Loan interest rate, which varies depending on various factors, including income, repayment capacity, credit score, principal amount, and tenure. A higher credit score, longer tenure, and a lower principal amount will attract lower interest rates and vice-versa. Since the bank is responsible for setting it for each borrower, you should use the Loan calculator to determine the equated monthly instalments on your borrowing. 

How to calculate the EMIs? 

If you want to calculate your EMI for Personal Loan using the calculator, you need to use the formula EMI = P x (R/100) x (1+ (R/100)^N / [(1+R/100)^N-1. Here, EMI is the equated monthly instalment, P refers to the principal amount, R denotes the interest rate, and N is the Loan tenure in months. The EMI is a combination of the principal and interest payable on the Loan.  

Which factors affect the interest rates? 

Banks decide the interest rates on the borrowing. However, a few factors influence it and may help you get the best rates: 

  • Credit scores: A three-digit number determines your creditworthiness to the bank. A score of 750 or more gives them the confidence that you can repay the Loan on time. It also influences banks to lower interest rates as they are sure you will not default on payments. 
  • Loan amount: Thanks to a high credit score, you can negotiate to get a higher Loan amount. The bank can approve your request. If they do so, your interest rate decreases, enhancing your ability to fulfil your dreams without stressing your finances. 
  • Loan tenure: It is the period within which you must repay your borrowed amount with interest. Usually, a shorter duration would mean you must repay a higher Personal Loan interest rate. The opposite is applicable when you select a longer Loan tenure. 
  • Repayment schedule: The repayment schedule refers to how often you repay your Loan EMIs. If it is frequent, the interest burden reduces with every repayment. 

Why should you use the Personal Loan EMI calculator? 

Today, we want everything instantly, whether money or estimates. The EMI calculator is a blessing for many Loan borrowers. It aids you in calculating your Loan affordability by entering the values in the designated fields and selecting a pocket-friendly scheme. You should use it to avoid errors during manual calculations, get quick and accurate results, and access it from anywhere and anytime on the Banking app. 


With technological advancements, you can easily apply for Loans without visiting the bank or dealing with excessive paperwork. Every bank now accepts digital Loan applications, making your life easier.