Personal Loan: How to repay Rs 20 lakh, 5-year loan in 3.5 years and save Rs 2.88 lakh in interest
Personal Loan Calculator: Unlike home loans, which can stretch up to decades, lenders give personal loans for up to 5 years of duration. Personal loans don't have collateral, so they come at a higher rate compared to home loans or vehicle loans.
Personal Loan Calculator: Borrowers take personal loans for various reasons. It may be because they need some renovation work at their home, they need to buy some property; for wedding purpose; or they want to travel. Unlike home loans, which can stretch up to decades, lenders give personal loans for up to 5 years of duration. Personal loans don't have collateral, so they come at a higher rate compared to home loans or vehicle loans. For a borrower, factors such as credit score, payment history, and income play a key role in determining the rate of interest for a personal loan. In this write-up, get to know how you can save Rs 2.88 lakh and repay a 5-year personal loan in just 3.5 years.
Photos: Unsplash/Pixabay
(Disclaimer: These calculations are for knowledge purpose only and are not investment advice. Actual calculations may vary from bank to bank.)
Personal loan conditions
Here, we will discuss a Rs 25 lakh personal loan at a 13 per cent annual interest rate for 5 years.
What will be the EMI amount?
Given these loan conditions, the estimated equated monthly instalment (EMI) for the loan will be Rs 56,882.68.
What will be the interest and repayment amounts?
The estimated interest on the Rs 25 lakh loan will be Rs 9,12,961, and the estimated total repayment amount will be Rs 34,12,961.
How can one repay Rs 25 lakh, 5-year loan in 4 years?
Instead of Rs 56,882.68 EMI, if one goes for an estimated Rs 67,068.74 EMI, the loan tenure will be reduced to 4 years.
How much money will be saved on interest then?
The estimated interest will be reduced to Rs 7,19,300, and the estimated repayment amount will be Rs 32,19,300. So, by paying an estimated Rs 10,186.06 extra in EMI, the estimated amount one will save will be Rs 1,93,661.
How can one repay Rs 25 lakh, 5-year loan in 3.5 years?
In that case, they need to increase their EMI from estimated Rs 56,882.68 to estimated Rs 74,405.24, and the loan tenure will be reduced from 60 months to 42 months.
How much money will be saved on interest then?
After increasing EMI by an estimated Rs 17,522.56, the loan interest will be reduced to an estimated Rs 6,25,020, and the estimated repayment amount will be Rs 31,25,020. The estimated amount saved will be Rs 2,87,941.