Calculation of Personal Loan Interest Rate
Loan interest rates are a critical factor in calculating the loan amount. Hence, you must determine the interest rate on personal loans beforehand based on factors such as the loan amount and the loan tenure.
The basic formula to calculate EMI and interest rates on personal loans is:
P * r * (1+r) ^n / ((1+r) ^n-1)
Here, “P” is the principal amount, “R” is the rate of interest per month and “n” is the loan tenure. You can understand how to calculate loan interest rates from the below example:
Let’s say that you want to take a personal loan of Rs 2 lakh (P), with an interest rate (r) of 15% and a loan tenure (n) of 2 years. Knowing these factors, you can calculate the loan interest rates by putting the figures in the above formula:
- P = Loan Amount
- R = Rate of Interest
- N = Loan Tenure
Total Interest = Rs 32,736, which in percentage terms refers to 14% of the total repayment value of the loan.
The above method of manually calculating the payable interest can be complex. IIFL Finance has designed an online personal loan EMI calculator to let you calculate the personal loan interest rate in India along with the overall due interest on the loan.
Head over to the IIFL website to use the personal loan EMI calculator by entering basic information such as the desired loan amount, the loan tenure and the applicable interest rate. Afterwards, IIFL Finance’s personal loan EMI calculator will let you know the best personal loan interest rates, total payment, including the principal and interest amount and your monthly EMI.
IIFL Finance Personal Loan Rates
IIFL Personal Loan offers attractive interest rates that ensure that your EMIs are affordable throughout the loan tenure. At IIFL, we do not believe in hidden charges that take customer by surprise and are transparent in our dealings.
- Interest Rate
12.75% - 44% p.a.
- Loan Processing Charges
2% - 9% + GST*
(Additional Upto ₹500 will be charged as Convenience Fees)
- Nach / e-mandate bounce Charges (In Rupees):
₹ 500/ + GST (if applicable)
- PENAL / DEFAULT CHARGES: (To be charged in case of any failure to make timely payments)
24% p.a. +GST (if applicable)
- Bank Swapping Charges
Rs.500 + GST (If applicable)
- Other Charges (NESL Reporting)
As Applicable*
These charges shall be charged annually in accordance with the fee schedule provided by NESL and are subject to change by NESL.
| Foreclosure Range | Loan Tenure (months) |
>=6
|
>=12
|
<=24
|
>24
|
|---|---|---|---|---|---|
| 0-6 | 7% | 7% | 6% | 6% | |
| 7-12 | NA | 6% | 6% | 6% | |
| 13-18 | NA | NA | 5% | 5% | |
| 19-24 | NA | NA | 3% | 3% | |
| >24 | NA | NA | NA | 2% |
Tips to Avail Personal Loans at Low Interest Rate
Getting the lowest interest rate personal loan does not entirely depend on the lender. As lenders analyse numerous factors related to the borrower to determine the best personal loan interest rates, borrowers can manage these factors to avail of a personal loan at a low-interest rate. Some tips are listed below:
Factors that affect Personal Loan Interest Rates
The loan interest rates must be affordable as the repayment will create a financial obligation for the borrower. Numerous factors affect loan interest rates, and you must understand each of them before opting for a personal loan. Here are the affecting factors:
-
Personal Income : The monthly or annual income is the foremost factor that affects the personal loan interest rates in India. Lenders are more comfortable giving loans to an individual with a higher monthly income, which suggests that they would have enough money to repay the personal loan. The greater your income, the higher the chances that the lender will offer you the lowest interest rate personal loan.
-
Credit Score : The credit score represents your ability to repay a loan or other credit bills. Based on your past payment history, you are offered the lowest interest rate loans. A good credit score (over 750 out of 900) is a key factor affecting the interest rates on personal loans. The higher the credit score, the higher the chances of the lowest personal loan interest rates.
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Stability : Lenders analyse the borrowers based on the stability of their income source. If you are a salaried employee working for a renowned organisation, lenders will view it as a positive sign as you will have a stable career and an uninterrupted source of income.
For self-employed individuals, it is better to have a constant and regular source of income or a business with a high turnover. If you are cash positive, the personal loan will have a lower interest rate. -
Loan Factors : Lenders charge interest based on factors such as the desired loan amount and the loan tenure. If your chosen loan amount is high, it will result in a high-interest rate. However, the interest rates on personal loans will be lower for a loan that has a high loan tenure. Hence, you must adjust these two factors to attain an ideal interest rate.
Personal Loan Interest Rate FAQs
An interest rate between 12.75% - 44% on a personal loan is a good and affordable interest rate.
Although the interest rate varies from lender to lender, the lowest rate of interest on a personal loan is 12.75%
It is when the loan interest rates remain unchanged throughout the loan tenure or repayment cycle.
You can use IIFL Finance’s personal loan EMI calculator, which will calculate the total interest payout based on selected factors such as the loan amount and tenure.
The fixed interest rate on a personal loan remains unchanged throughout the loan tenure. A floating interest rate fluctuates throughout the loan tenure.
The interest rate on Rs. 1 lakh loan would entirely depend on the chosen loan tenure. If the tenure is less, the interest will be higher, while it will be lower if the chosen tenure is higher.
The stamp duty charge is usually 0.1% on the total loan amount if the loan amount is less than Rs 10 lakhs.
IIFL Personal Loan Interest Rate Insights
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