Personal loan EMI is calculated using the formula EMI = [P × R × (1+R)^N] / [(1+R)^N − 1], where P is the principal loan amount, R is the monthly interest rate, and N is the tenure in months. Since personal loans are unsecured, this reducing-balance formula applies directly to the sanctioned amount.

Personal loans are unsecured, meaning there is no collateral backing the loan, which makes them riskier for lenders. As a result, personal loan interest rates in India typically range from 10% to 30% per annum, higher than secured loans like home or car loans.

Your EMI depends on three factors: the principal amount borrowed, the interest rate offered (which is influenced by your credit score and income), and the repayment tenure you choose. Increasing any of the first two, or shortening the tenure, increases your EMI.

Many lenders charge a prepayment or foreclosure penalty of 2-5% on the outstanding principal if you repay a personal loan before the end of its tenure, though some new-age lenders offer zero-prepayment-charge options. Check your loan agreement for specific terms.

A higher CIBIL score (generally 750 and above) helps you qualify for lower interest rates, which directly reduces your EMI and total interest payable. Borrowers with lower credit scores are often offered higher rates or may face loan rejection.