Loan Calculator: If you take a loan of ₹8 lakh for 4 years, what will the EMI and total interest be?
Find out the EMI and total interest payable for an ₹8 lakh loan taken over 4 years at interest rates of 8%, 10%, and 12%. Here, you can easily understand the complete loan breakdown.
If you are planning to take a personal loan of ₹8 lakh for a specific need and intend to repay it over 4 years (48 months), the most important questions for you would be: what will the monthly EMI be, and how much total interest will go to the bank?
The answer depends on your loan's interest rate. Different banks and NBFCs offer loans at varying interest rates. Therefore, before taking a loan, it is essential to understand the calculation of both the EMI and the total interest.
What will the EMI be for an ₹8 lakh loan?
Suppose you take a loan of ₹8 lakh for 4 years (48 months) at an interest rate of 10%. Based on this, your EMI comes to approximately ₹20,286 per month. This means you will have to pay an EMI of over ₹20,000. By the time your EMI payments conclude after 4 years, you will have paid a total of ₹9,73,728.
In other words, by borrowing ₹8 lakh, you will end up paying approximately ₹1.74 lakh in interest alone over the 4-year period.
What if the interest rate is 12%?
Now, if the bank offers you the loan at an annual interest rate of 12% instead of 10%, the calculation changes. For an ₹8 lakh loan over 4 years at 12% interest, the EMI works out to approximately ₹21,067 per month.
In this scenario, over 48 months, you would end up paying ₹10.11 lakh instead of ₹8 lakh. Of this amount, ₹2.11 lakh would go towards interest alone.
What would the EMI be for an ₹8 lakh loan at different interest rates?
| Interest Rate | Monthly EMI | Total Interest Paid |
|---|---|---|
| 8% | ₹19,531 | ₹1.38 lakh |
| 9% | ₹19,908 | ₹1.56 lakh |
| 10% | ₹20,286 | ₹1.74 lakh |
| 11% | ₹20,675 | ₹1.92 lakh |
| 12% | ₹21,067 | ₹2.11 lakh |
| 14% | ₹21,853 | ₹2.49 lakh |
| 15% | ₹22,252 | ₹2.68 lakh |
What should you consider when taking out a loan?
When taking a loan, people often focus solely on the monthly EMI amount. However, to understand the true cost, one should also consider the total repayment amount and the total interest payable. For instance, if you take a loan of ₹8 lakh at a 10% interest rate, the EMI comes to ₹20,286. While this figure might not seem very high at first glance, over a period of four years, the total payout amounts to ₹9.74 lakh. This means you borrowed ₹8 lakh but paid an extra ₹1.74 lakh.
Additionally, banks may charge processing fees, GST, and prepayment or foreclosure charges. Therefore, one should look beyond just the interest rate when taking out a loan.
