Does a personal loan reduce my tax?

Generally no. Interest on a personal loan is only deductible if you can prove the money was used to buy or build a house, for business purposes, or to buy an asset — and you need documentation to support the claim.

Can I prepay a personal loan early?

Most lenders allow prepayment after 6-12 EMIs. Fixed-rate loans usually carry a 2-5% foreclosure charge on the outstanding principal, so compare that fee against the interest you would save before deciding.

What happens if I miss an EMI?

You pay a late fee plus penal interest, and the default is reported to credit bureaus. A single missed payment can drop your credit score by 50-100 points and stay on your report for years.

Should I pick a longer tenure to lower the EMI?

A longer tenure lowers the monthly outgo but raises the total interest sharply. Use the tenure slider above and watch the total interest figure — that is the real price of a smaller EMI.

Personal Loan EMI Calculator

Unsecured cash for weddings, travel, medical bills or consolidating dues.

Monthly EMI: ₹10,996
Total interest: ₹1,59,778
Principal + interest: ₹6,59,778
Total cost: ₹6,71,578

Your loan

Loan amount₹5 L

₹

Interest rate11.5%

% p.a.

Tenure5 yr

months

Where your money goes

Over 5 yr, ending Sept 2031.

Total cost of this loan

₹6,71,578

Principal₹5,00,000 74%
Interest₹1,59,778 24%
Fees & charges₹11,800 2%

Your path to debt-free

Interest dominates the early years; principal takes over later.

Principal Interest Balance (peak ₹4.81 L)

Pay it off early

One-time prepayment (₹)

Paid in month

Recurring prepayment (₹)

Repeats every (months)

Recurring payments start in month

A prepayment should Shorten the loanKeeps the EMI and clears the debt sooner. Saves the most interest.Lower the EMIKeeps the end date and frees up monthly cash flow instead.

The difference an extra payment makes

No extra payments in this plan.

Fees and charges

Processing fee (%)

Fee cap (₹, 0 = none)

Insurance (₹)

Other charges (₹)

Processing fee: ₹10,000
GST on fee: ₹1,800
Insurance: ₹0
Other charges: ₹0
Payable upfront: ₹11,800

Amortisation schedule

Principal	Interest	Total paid	Balance
₹18,793	₹14,196	₹32,989	₹4,81,207
₹80,787	₹51,169	₹1,31,956	₹4,00,420
₹90,583	₹41,372	₹1,31,956	₹3,09,837
₹1,01,567	₹30,388	₹1,31,956	₹2,08,270
₹1,13,883	₹18,072	₹1,31,956	₹94,387
₹94,387	₹4,580	₹98,967	₹0

Before you sign for a personal loan

Where it works for you

No collateral or guarantor, so nothing you own is at risk if you default.
Disbursed in 24-72 hours, often same day for pre-approved customers.
Free end use — the lender does not ask what you spend it on.
Fixed EMI for the whole tenure makes budgeting predictable.

What it costs you

The most expensive mainstream loan: rates run 11-24% versus 8-9% for a home loan.
No tax deduction is available on the interest you pay.
Short tenures (up to 5-7 years) keep the EMI high relative to the amount.
Foreclosure charges of 2-5% often apply if you close it in the first year.

Who qualifies

Age between 21 and 60 at loan maturity.
Net monthly income of ₹25,000+ for salaried, or 2-3 years of filed ITRs if self-employed.
Credit score of 750 or above for the advertised rate.
Total EMIs, including this one, under 50-55% of your take-home pay.

What you need to submit

PAN and Aadhaar for identity and address.
Last 3 months of salary slips or 2 years of ITRs.
Last 6 months of bank statements for the salary account.
Employment proof or business registration papers.

Ways to pay less

A 1% rate difference on ₹5 lakh over 5 years is roughly ₹15,000 of interest — always compare three lenders.
Processing fees are negotiable; ask for a waiver before you accept the sanction letter.
Prepaying in the first two years saves the most, because early EMIs are mostly interest.
Avoid loan insurance bundled into the principal unless you have costed it separately.

Questions people ask

The EMI formula is P x r x (1+r)^n / ((1+r)^n - 1), where P is the loan amount, r is the monthly interest rate (annual rate divided by 12 and then by 100) and n is the tenure in months. The instalment stays the same each month, but the share going to interest falls as the balance drops.