How the interest is calculated for loans?

I want to take a personal loan of rupees 2 lacs. what are the different mehtods of interest calculation. which bank wold be ideal to approach for the loan. Thanks,

5 Replies to “How the interest is calculated for loans?”

  1. You have simple interest, compound interest, and I’m sure other types, so you better have everything explained to you before you sign anything.

  2. every banks website have a EMI calculator you go to any bank site and calculate it. it depends upon the term you repay it. the best bank in my opnion is SBI ( i presume you are in india)

  3. Interest is calculated on the basis of how much amount due and the period of repayment within the norms of RBI provisions applied to the different banks.

  4. People with poor credit feel that it is difficult to get personal loans. However, there are many financial companies and banks that provide loans to bad credit applicants. Bad credit personal loans are generally soughtThe interest rates on secured loans are lower than unsecured loans. However, there is always the risk of losing your house or property if the loan is not repaid.

  5. The banks in general calculate interest on quarterly basis .
    For Example : Your principle amount =Rs.200,000/-
    Rate of interest (let it be 12%)
    Number of Installment (Say for 10 years ) =120;
    (40 Quarters)
    Then Banks interest will be calculated as :
    Interest =———————–


    Total Amount =Rs.200000+123000 =323000/-

    EMI =323000/120 =Rs. 2691.67 or Say Rs 2692/-

    Almost all the banks have similar interest rates , but processing procedure may differ.
    It is always better to go for a Government Bank instead of Private Bank.

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