👉How To Calculate Personal Loan Interest Rate❓❓❓

by | Oct 19, 2024 | SNP Finserv

To calculate the personal loan interest rate in rupees, you can use the following formula:

Formula:

Interest = (Principal x Rate x Time) / 100

Variables:

  1. Principal (P) = Loan amount (in rupees)
  2. Rate (R) = Annual interest rate (in percentage)
  3. Time (T) = Loan tenure (in years)

Steps:

  1. Convert the annual interest rate to a monthly rate: R = R/12
  2. Convert the loan tenure to months: T = T x 12
  3. Calculate the monthly interest: Interest = (P x R x T) / 100
  4. Calculate the total interest payable: Total Interest = Interest x T

Example:

Loan amount (P) = ₹2,00,000
Annual interest rate (R) = 12%
Loan tenure (T) = 5 years

Calculation:

  1. Monthly interest rate = 12%/12 = 1%
  2. Loan tenure in months = 5 x 12 = 60 months
  3. Monthly interest = (2,00,000 x 1% x 60) / 100 = ₹3,333
  4. Total interest payable = ₹3,333 x 60 = ₹1,99,980

EMI Calculation:

EMI = (Loan amount + Total interest) / Loan tenure
EMI = (2,00,000 + 1,99,980) / 60
EMI = ₹3,666

You can also use online personal loan calculators or consult with financial institutions to determine your interest rate.

Interest Rate Types:

  1. Flat Rate: Interest calculated on the initial loan amount.
  2. Reducing Balance Rate: Interest calculated on the outstanding loan balance.

Factors Affecting Interest Rate:

  1. Credit score
  2. Loan tenure
  3. Loan amount
  4. Income
  5. Employment history
  6. Market conditions

Keep in mind that interest rates vary among lenders and are subject to change. Always check with your lender for the most up-to-date rates.