Personal loan actual interest rate calculator (with processing fee & GST)

It is the yearly rate you really pay once upfront costs are counted, also called the effective interest rate or APR. The rate on your offer is charged on the full loan amount, but the processing fee, the GST on it and other charges reduce the money you actually get while your EMIs stay the same. Measured on what you receive, the rate is higher.

The advertised rate covers interest only. Fees are extra, and because they are paid upfront, they cost more per year on a short loan than on a long one. Two offers with the same advertised rate can have very different actual rates if their processing fees differ.

The processing fee and the GST on it are deducted from your loan or paid upfront, so you receive less but repay EMIs on the full amount. That gap is a cost, just like interest. The worked example on this page shows how much a 2% fee plus GST adds on a 3-year loan; enter your own fee above to see your figure.

APR (annual percentage rate) is the yearly cost of a loan including interest and upfront fees and charges. Because fees reduce the money you actually receive while your EMIs stay the same, the APR is usually higher than the interest rate on the offer.

RBI requires lenders to give a Key Facts Statement (KFS) for retail and MSME term loans, and all such loans sanctioned on or after 1 October 2024 must have one. RBI describes the APR on it as the annual cost of credit, including the interest rate and all other charges tied to the loan. This checker uses the method RBI illustrates in the same circular, so you can check the KFS figure yourself.

It finds the monthly rate at which your EMIs exactly repay the amount you actually receive after fees and charges (an internal rate of return), then multiplies it by 12. This is the method illustrated in RBI's Key Facts Statement circular of April 2024, and our calculator reproduces RBI's worked example (17.07%).

A reducing (or diminishing) balance rate charges interest only on what you still owe, so the interest part of your EMI falls every month. A flat rate charges interest on the original loan amount for the whole tenure, so the same number costs much more. This checker works with reducing rates; the example on this page converts a flat rate, and if an offer quotes one, ask the lender for the APR on the KFS.

Small differences can come from charges we don't know about, a first EMI date that isn't exactly one month after disbursal, or rounding. If the gap is large, check the KFS line by line or ask the lender to explain it.

Not always. An offer with a lower rate but a higher processing fee can cost more overall, especially on shorter loans. Compare the total cost and APR of each offer for the same amount and tenure.