How to Calculate Loan Interest

One of the top banks in India that provides personal loans to its clients is HDFC Bank. The HDFC Personal Loan is an unsecured loan that may be utilised for various personal requirements, including debt consolidation, home improvement, travel, wedding, and medical costs.

The following are some qualities and advantages of the HDFC Personal Loan:

  1. Flexible Loan Amount: Depending on the borrower’s eligibility, an HDFC Personal Loan might be for anywhere between 50,000 and 40 lakhs of rupees.
  2. Competitive Interest Rates: Based on the borrower’s creditworthiness, HDFC Personal Loan interest rates are reasonable and competitive.
  3. Flexible payback duration: The loan payback duration can range from 12 to 60 months, allowing the borrower to select a length of time that best matches their ability to make payments.
  4. Quick Disbursal: Loans are disbursed quickly, often within two to three business days following loan approval.
  5. Low paperwork Requirements: The application procedure for an HDFC Personal Loan is simple and quick with low paperwork requirements.

How to Calculate Loan Interest

The following formula may be used to calculate the loan interest:

(Principal Amount x Interest Rate x Loan Tenure)/100 equals the total interest owed.

The loan amount you have borrowed is referred to as the principal, the interest rate is the percentage the lender charges on the loan amount, and the loan term is the length of time you have had the loan.

To better understand how to compute loan interest, let’s look at an example:

Let us say you took out a two-year, Rs. 1,000,000 personal loan with a 12% annual interest rate.

The total interest owed on the loan will be as follows using the method described above:

Total Interest Payable = (1,00, 000 x 12 x 2)/100 = Rs. 24,000

Therefore, Rs. 24,000 in total interest would be paid on loan, making the total amount due (principal plus interest) Rs. 1,00,000 + Rs. 24,000 = Rs. 1, 24,000.

Most lenders on their websites have EMI calculators that may be used to determine the monthly payment, interest, and total amount owed on a loan. Before applying for a loan, it is usually good to review the loan terms and the repayment plan to prevent confusion or additional financial strain.

Eligibility Criteria of HDFC Personal Loan

The following are the requirements for eligibility for an HDFC Personal Loan:

  • Age: The candidate must be at least 21 years old and no older than 60 years old.
  • Income: Depending on the borrower’s region and occupation, a minimum income may be necessary to qualify for an HDFC Personal Loan. Salaried Individuals must make a minimum of Rs. 20,000 per month, and those who are self-employed must make a minimum of Rs. 5 lakh per year.
  • Credit Score: To be eligible for an HDFC Personal Loan, you must have a decent credit score. The necessary credit score is 650.
  • Employment Status: Salaried employees must have had a steady position for at least two years, and self-employed individuals must have operated a successful firm for at least three years.
  • Work Experience: Salaried employees must have at least two years of work experience, and self-employed individuals must have at least three years of company experience.
  • Other variables: When determining a borrower’s eligibility for an HDFC Personal Loan, additional variables, including the borrower’s repayment ability, outstanding debts, and credit history, are also considered.

The qualifying requirements may change depending on the applicant’s profile and internal bank rules. Therefore, it is usually good to confirm with the Bank the precise eligibility requirements needed to submit an application for a personal loan.

Documents Required

The following papers are necessary to apply for an HDFC Personal Loan:

  • Identity proof: Any one of the following, an Aadhaar card, PAN card, passport, voter ID card or driving license, may be used as identity evidence.
  • Address Proof: The Aadhaar card, a utility bill, a passport, a voter ID card, or a driver’s license may all be used as evidence of address.
  • Income Proof: Salaried persons must provide the most recent three months’ pay stubs and the previous six months’ salary account bank statements. Self-employed people must provide their most recent two years’ income tax returns, audited financial statements, and six months’ business account bank statements.
  • Employment Proof: Salaried people must produce their current employer’s employment certificate, while self-employed people must present their business registration and GST registration certificates.
  • Passport-size Photographs: The candidate must submit recent passport-size photos.
  • Other Documents: Additional paperwork, including a loan application form, a loan agreement, and post-dated checks, must be supplied following the lender’s specifications.

The essential papers needed for an HDFC Personal Loan are those listed above. Nevertheless, depending on the borrower’s profile and the requested loan amount, the lender could request extra documentation. Therefore, before applying for a personal loan, it is usually good to confirm with the lender the precise papers needed.


The following are some of HDFC Personal Loan’s main benefits:

High Loan Amount: Depending on the borrower’s eligibility, HDFC Bank offers personal loans with amounts ranging from 50,000 to 40 lakhs of rupees.

Attractive Interest Rates: Personal loans from HDFC Bank provide attractive interest rates beginning as 10.50% annually. The borrower’s credit rating, income, and other factors may affect the interest rates.

Variable payback Terms: Depending on the loan amount and the borrower’s preferences, HDFC Bank provides variable payback terms ranging from 12 to 60 months.

Quick Loan Disbursal: The loan money is often released within 4 hours of the loan being approved by HDFC Bank, which offers speedy loan disbursal.

Minimal Documentation: HDFC Bank just requires a minimum amount of paperwork for personal loan applications, and the approval procedure is simple and quick.

No Collateral or Security Needed: To qualify for an unsecured personal loan from HDFC Bank, no collateral or security is needed.

Balance Transfer Facility: Personal loans from HDFC Bank come with a balance transfer option that allows borrowers to transfer the remaining amount of an existing loan to HDFC Bank and take advantage of lower interest rates.

Pre-approved Offers: HDFC Bank offers pre-approved personal loan offers to its current clients, allowing them to apply for a loan swiftly and simply.

Before applying for a personal loan, it is usually important to review the loan terms, including the interest rates, processing costs, and other expenses.

How to Apply for a Personal Loan

To apply for a personal loan, follow these instructions:

Check Your Eligibility: The Bank website or a nearby Bank branch are both good places to check your eligibility for a Personal Loan. To determine your eligibility, you may also use the eligibility calculator.

Submit the Application: Apply online at the Bank website or in person at a local branch to submit your application for a Personal Loan. The personal loan application form must be completed and submitted with the appropriate supporting documentation.

Verification of Documents: After you submit the loan application form and the required paperwork, the Bank will examine the paperwork, check your credit history, and determine if you qualify for the loan.

Acceptance of Loan: If your loan application is accepted, the Bank will deposit the loan funds into your bank account quickly. The processing fees and other costs will be deducted before the loan amount is delivered.

Before applying for a personal loan, it is critical to check the interest rates, processing costs, and other fees charged by different lenders to ensure you are getting the best deal. To determine your EMI payment and the total amount owed on loan depending on the loan amount, period, and interest rate, you may also use the EMI calculator.