Fast money, priced accordingly
A personal loan is the only large credit you can get in an afternoon with no collateral — and the rate reflects it. Salaried borrowers with good scores see 11–16%; app-based instant loans run far higher. ₹3 lakh at 14% over 4 years is an EMI of ₹8,198 and about ₹93,500 of interest — nearly a third of the amount borrowed. Used for a genuine emergency it is a fine tool; used casually, it is the most expensive standing instruction on a salary account.
The flat-rate trap, in numbers
Sales pitches love the flat rate: “just 12%!” computed on the original amount for every year of the loan, ignoring that your balance falls with each EMI. On ₹3 lakh over 4 years, 12% flat means an EMI of ₹9,250 — which works out to roughly 20.8% on a genuine reducing-balance basis, the way every bank (and this calculator) actually computes interest. The defence is one question — “flat or reducing?” — and one comparison: the EMI in rupees against this page.
Where a personal loan makes sense — and where it never does
Reasonable: a medical gap after insurance, urgent home repairs, consolidating costlier credit-card debt (36–42% APR) into one cheaper EMI. Rarely reasonable: funding a wedding beyond savings, holidays, gadgets on “no-cost” EMIs stacked into real ones — and never for investing: no honest SIP projection clears a guaranteed 14% hurdle. If you hold assets, cheaper secured routes often exist: loans against FDs (~1% over the FD rate), gold loans, or a top-up on an existing home loan — same money at a fraction of the price, a day or two slower.
Fine print that changes the bill
Processing fees of 1–3% come off the disbursal, so a “₹3 lakh loan” may fund ₹2.94 lakh while you repay interest on 3. Foreclosure and part-payment charges (2–5% on fixed-rate personal loans, often after a 12-EMI lock-in) can blunt the maths of closing early — check the schedule before signing if you expect a bonus. Every application triggers a hard credit enquiry, and a missed EMI bruises the score that priced your loan in the first place. Borrow once, at the best rate a little patience can find, and keep total EMIs — this one included — inside about a third of your take-home.