What is the EMI for a Personal Loan of ₹4 Lakhs?

When considering a personal loan, understanding the EMI payable is crucial. So, let’s understand how EMIs are calculated for a ₹4 Lakh personal loan. For this, let’s explore how the tenure and interest rate of your loan affect your monthly instalments.

EMI Calculation

To calculate the personal loan EMI, the following formula is used:

EMI = [P x R x (1+R)^N] / [(1+R)^N – 1]


P = Loan amount (₹4,00,000)

R = Monthly interest rate (Annual interest rate / 12)

N = Loan tenure in months

It takes into account the loan amount, interest rate, and tenure.

Understanding the Impact of Tenure and Interest Rate

Here are how these factors can impact your monthly instalment amount:

Interest Rate: A higher interest rate leads to an increase in the total repayment costs. Thus, the EMI also increases. Conversely, a lower interest rate reduces the EMI and total interest costs.
Tenure: A longer tenure leads to lower EMI amounts but higher interest costs. Meanwhile, a shorter tenure results in lower interest expenses and higher EMIs.

Here’s an example to understand this better. Let’s consider the impact of tenure and interest rate variations on the EMI for a ₹4 Lakh personal loan. For this, let us consider that the interest rate is set at 12% per annum:


Tenure (In months)

EMI (Approx.)

Total Interest Amount

Total Repayment





















As the tenure increases, the EMI decreases, and vice versa. Opting for a longer tenure reduces the monthly burden but increases the total interest paid over the loan term. On the contrary, a shorter tenure leads to higher EMIs but lower overall interest costs.

For instance, choosing a 12-month tenure results in the highest EMI of ₹35,538 but minimises interest expenses. On the other hand, opting for a 60-month tenure significantly reduces the EMI to ₹8,896 but increases the total interest paid over the loan duration.

Comparing the EMIs for different tenures and interest rates highlights the trade-off between affordability and total interest cost. You can use this information to choose a tenure and interest rate that best aligns with your financial goals and repayment capabilities.

Using Online EMI Calculators

Online calculators can help you calculate your personal loan EMIs easily. By entering the loan amount, interest rate, and tenure, you can instantly determine their monthly EMI obligations. Additionally, advanced calculators provide detailed amortisation schedules, allowing you to visualise the repayment structure. It further enables you to understand the impact of tenure and interest rate variations on your loan.

Amortisation Schedule

The amortisation schedule outlines the repayment structure of the loan, detailing how each EMI payment is allocated towards the principal and interest components. In the initial stages of the loan tenure, a larger part of the EMI is directed towards interest payments. Meanwhile, the remaining amount is allocated towards reducing the principal. As the loan progresses, the proportion of the EMI allocated towards the principal increases, leading to a gradual reduction in the outstanding loan balance. Understanding the amortisation schedule can help you plan your finances better and negotiate for terms that best suit your repayment capabilities. Utilise personal loan EMI calculators to check the possible amortisation schedules online. This can help you make an informed decision quite easily.  

Considerations Before Choosing the Tenure

Long and short tenures, both have their own sets of pros and cons. Here are some things to consider before choosing a tenure:

Financial Situation: Assess your income stability and monthly cash flow to determine a comfortable EMI amount
Repayment Capacity: Choose a tenure that aligns with your repayment capacity without straining your finances
Total Interest Cost: Evaluate the total interest payable over different tenures to balance EMI affordability and interest savings
Prepayment Options: Check if the lender allows prepayment or foreclosure without charging hefty penalties. This enables you to close the loan early and save considerably on interest costs.

Impact of Prepayments

Making prepayments towards your personal loan principal can have significant benefits. It can reduce the overall interest burden and shorten the loan tenure. Here’s how prepayments can impact your loan repayment journey:

Interest Savings

Each prepayment made towards the principal amount reduces the outstanding balance on which interest is calculated. As a result, you will pay less interest over the remaining loan tenure, leading to potential long-term savings.

Shortened Loan Tenure

By reducing the principal balance through prepayments, you effectively shorten the duration of the loan. This means you can become debt-free sooner and save on the total interest paid over the life of the loan.

Prepayment Charges

Before making prepayments, it is essential to check if your lender imposes any prepayment charges. Some lenders may levy a fee for early repayment to compensate for the interest income they would have earned. Assess whether the potential interest savings outweigh the prepayment charges.

Strategic Prepayment

Consider strategically allocating surplus funds towards prepayments. You can prioritise high-interest debts or target loans with shorter tenures to optimise interest savings. Evaluate your financial situation and determine the most effective repayment strategy.

Loan Repayment Strategies

Alongside checking the EMI amount, developing effective loan repayment strategies can help you manage your personal loan of ₹4 Lakhs efficiently. Here are some strategies to consider:

Budgeting for EMIs

Ensure your monthly budget accounts for the personal loan EMIs along with other essential expenses. Set aside funds specifically for loan repayments to avoid missing payments and incurring late fees.

Prioritising High-interest Debts

If you have multiple loans or debts, prioritise repayment of high-interest debts first. Allocate any surplus funds towards loans with higher interest rates to minimise the overall interest cost and accelerate debt repayment.

Exploring Refinancing Options

Monitor the interest rate environment and explore refinancing options if you can secure a lower interest rate than your current loan. Refinancing can reduce your EMI burden and save on interest costs over the loan tenure. However, consider any associated fees or charges before refinancing.

Making Extra Payments

Whenever possible, make extra payments towards your 4 Lakh personal loan. Even small additional payments can significantly reduce the outstanding balance and accelerate loan repayment.

Reviewing Loan Terms

Regularly review your loan terms and conditions to stay informed about any changes in interest rates, fees, or repayment schedules. Understanding your loan agreement can help you make informed decisions and avoid any surprises during the repayment process.


Understanding the nuances of EMI calculation is essential for effective financial planning. By considering factors such as the tenure and interest rate borrowers can make informed decisions to manage their loan obligations efficiently. Utilising online personal loan EMI calculators enables you to estimate your monthly payments accurately. It helps you visualise the impact of various loan parameters, empowering you to navigate the borrowing process seamlessly.

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