Fix the EMI by the slow months, not the good ones
A personal loan comes quickly and needs no security, but the EMI does not change with the season. At 3 years, ₹41,013 is about half of Alpesh-bhai's slow-month profit. At 4 years it is ₹32,792, about 41%, and at 5 years ₹27,922, about 35%.
He picks 3 years and keeps three EMIs, ₹1,23,039, aside before the stock arrives, so a weak month does not mean a missed payment. The 3-year loan costs about ₹92,000 a year in interest on average. The new stock should earn more than that, or the loan is not worth taking. The 5-year loan would cost ₹4,75,314, almost ₹2 lakh more.
Frequently asked questions
What is the EMI on ₹12 lakh for 5 years?
At 14%, the 5-year EMI is ₹27,922. Interest is ₹4,75,314 and the total is ₹16,75,314, so interest comes to 39.61% of the loan. That is ₹1,98,840 more than 3 years.
How much is the 2-year EMI on a ₹12 lakh loan?
At 14%, it is ₹57,615 a month, with ₹1,82,771 interest. It saves ₹93,703 compared with 3 years, but only suits a business whose slow months still leave well over ₹1 lakh.
Can I repay ₹12 lakh within a year, after the season?
A 1-year loan at 14% has an EMI of ₹1,07,745 and interest of ₹92,934. That is cheap overall, but you need over ₹1 lakh free every month, slow months included.
What if the rate quoted is 15%?
At 15% for 3 years, the EMI is ₹41,598 and interest is ₹2,97,542. That is ₹585 more a month and ₹21,068 more in all. Clean tax returns and bank statements can help you get a better quote.
Open the Personal Loan EMI Calculator with your own numbers →
