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How to compare personal loan offers by EMI and cost

Updated 2026-11-13

Quick answer

Compare personal loans by total interest, not just the EMI. A ₹3,00,000 loan at 14% for 3 years has an EMI of ₹10,253 and costs ₹69,118 in interest; stretched to 5 years, the EMI falls to ₹6,980 but the interest rises to ₹1,18,829.

Steps

  1. Collect each offer’s loan amount, yearly interest rate, tenure and processing fee.
  2. Enter the amount, rate and tenure of each offer in the personal loan calculator.
  3. Note the EMI and the total interest for every offer.
  4. Add the processing fee to the total interest to get the true cost of each offer.
  5. Choose the offer with the lowest total cost whose EMI still fits comfortably in your monthly budget.

Tenure: lower EMI, higher cost

On ₹3,00,000 at 14%, a 1-year loan has an EMI of ₹26,936 and ₹23,234 of interest. At 2 years it is ₹14,404 and ₹45,693. At 3 years it is ₹10,253 and ₹69,118. At 5 years it is ₹6,980 and ₹1,18,829.

Stretching from 3 to 5 years saves about ₹3,300 a month but adds about ₹49,700 in interest. Personal loans are unsecured and the rates are higher than for a home or car loan, so the cost of extra years builds up quickly.

How much the rate matters

Keep the amount and the 3 years and change only the rate. At 12% the EMI is ₹9,964 and the interest ₹58,715. At 14% it is ₹10,253 and ₹69,118. At 16% it is ₹10,547 and ₹79,696. Each two points of rate adds roughly ₹10,000 of interest on this loan, so it is worth comparing several lenders.

Fees and prepayment

Processing fees, insurance add-ons and a prepayment or foreclosure charge are not in the EMI. Ask for them in writing. If you expect to repay early, the prepayment calculator shows how much interest an extra payment saves, and whether the charge cancels the gain.

Try it yourself

Common questions

Which is better, a lower EMI or lower total interest?

It depends on your budget. Choose the lowest total cost whose EMI you can pay without strain, and avoid stretching the tenure only to get a smaller number.

How do I find the true cost of a loan?

Add the total interest and every fee. The EMI alone hides the cost.

Does a personal loan need security?

Usually no, which is why the rate is higher than for secured loans such as home or car loans.

Can I repay a personal loan early?

Often yes, but check for a prepayment charge. Use the prepayment calculator to see whether the interest saved is worth it.

Also read: How EMI is calculated, with a worked example, How to calculate car loan EMI and the real cost