Matching the EMI to your take-home pay
On ₹40,000 a month, the 3-year EMI of ₹6,643 takes about a sixth of the salary. The 1-year EMI of ₹17,770 would take more than 40% of it, leaving little for rent, food and an emergency.
A sensible middle is the 2-year EMI of ₹9,415, a little under a quarter of his pay. It saves ₹13,190 in interest compared with 3 years. Pick the shortest tenure whose EMI still lets you save something every month.
Frequently asked questions
What is the EMI for a ₹2 lakh loan for 5 years?
At 12%, the 5-year EMI is ₹4,449. Total interest is ₹66,933, so you repay ₹2,66,933. That is ₹27,790 more interest than the 3-year loan, which costs ₹39,143.
What is the 1-year EMI on ₹2 lakh?
At 12%, it is ₹17,770 a month. Interest over the year is ₹13,237 and you repay ₹2,13,237. It is the cheapest choice overall but needs a high monthly income.
How much interest does a ₹2 lakh loan for 2 years cost?
At 12%, interest for 2 years is ₹25,953 with an EMI of ₹9,415. Total repayment is ₹2,25,953, which means interest adds 12.98% to the amount you borrowed.
Is the EMI on ₹2 lakh exactly double the EMI on ₹1 lakh?
Almost. At 12% for 3 years, ₹1 lakh has an EMI of ₹3,321 and ₹2 lakh has ₹6,643. The ₹1 gap comes from rounding. Interest also doubles, from ₹19,572 to ₹39,143.
