Calculate your merchant loan EMI
Year-by-year repayment schedule
| Year | Principal paid | Interest paid | Balance at year end |
|---|
Reducing-balance method. Results are estimates for planning; the lender's Key Fact Statement is final. Insurance, legal and other charges are not included.
Merchant loans are often repaid as a daily or weekly deduction from card or UPI settlements, so the effective yearly cost can be higher than the rate quoted.
Merchant Loan at a glance
The figures the calculator starts with come from these typical ranges. Change them to match the offer in front of you.
| Feature | What to expect |
|---|---|
| Typical loan amount | Roughly ₹50,000 to ₹50 lakh, often linked to a multiple of monthly card or UPI sales |
| Tenure | Typically 3 to 18 months, with repayment from sales or short instalments |
| Indicative interest rate | Roughly 15% to 36% a year or more in effective terms, depending on lender and sales pattern |
| Processing fee | Often around 1% to 4% of the amount plus GST; some lenders use a fixed fee structure |
| Security / collateral | Unsecured; repayment is linked to your card or UPI settlements |
| Typical time to disbursal | Often within one to three days when sales data can be verified |
From our Merchant Loan guide. Ranges are indicative; your offer may differ.
Merchant Loan EMI table at 24%
Monthly EMI for common merchant loan amounts at an example rate of 24% a year, on the reducing-balance method lenders use. Read across a row to see how a longer tenure lowers the EMI, and remember that it raises the total interest: on ₹4.5 lakh, the interest is ₹46,188 over 9 months but ₹90,287 over 18 months.
| Loan amount | EMI for 9 months | EMI for 1 year | EMI for 18 months |
|---|---|---|---|
| ₹1.5 lakh | ₹18,377 | ₹14,184 | ₹10,005 |
| ₹3 lakh | ₹36,755 | ₹28,368 | ₹20,011 |
| ₹4.5 lakh | ₹55,132 | ₹42,552 | ₹30,016 |
| ₹6 lakh | ₹73,509 | ₹56,736 | ₹40,021 |
How the interest rate changes your merchant loan EMI
Your rate depends on your credit score, income, the lender and the loan details. On ₹3 lakh over 1 year, the gap between the lowest and highest indicative rate is ₹36,734 in total repayment, which is why it pays to compare offers before you accept one.
| Interest rate | Monthly EMI | Total interest | Extra vs lowest rate |
|---|---|---|---|
| 15% | ₹27,077 | ₹24,930 | — |
| 24% | ₹28,368 | ₹40,415 | +₹15,485 |
| 30% | ₹29,246 | ₹50,954 | +₹26,024 |
| 36% | ₹30,139 | ₹61,664 | +₹36,734 |
Your EMI as a daily deduction
On a 1 year merchant loan of ₹3 lakh at 24%, the monthly EMI of ₹28,368 works out to about ₹1,091 a day over 26 trading days, or ₹6,546 a week. If the lender deducts a fixed share of each settlement instead, the loan is repaid faster in busy months and slower in quiet ones, and the effective yearly cost depends on how fast it is cleared.
Why fees weigh more on a short merchant loan
A processing fee is charged once, so the shorter the loan, the more it adds to the yearly cost. With a 2.5% fee plus GST on ₹3 lakh at 24%:
| Tenure | EMI | Interest | Fee incl. GST | APR |
|---|---|---|---|---|
| 9 months | ₹36,755 | ₹30,792 | ₹8,850 | 31.6% |
| 1 year | ₹28,368 | ₹40,415 | ₹8,850 | 29.9% |
| 18 months | ₹20,011 | ₹60,191 | ₹8,850 | 28.1% |
The interest falls as the tenure shortens, but the APR rises because the same fee is spread over fewer months. Compare offers on the total amount repayable, which the Key Fact Statement must show.
The real cost of a merchant loan: fees and APR
The EMI covers interest and principal only. Lenders also charge a processing fee, commonly around 1% to 4% of the amount on merchant loans, plus 18% GST, and it is usually deducted from the money you receive. Because you pay the EMI on the full amount but receive less, the annual percentage rate (APR) is higher than the interest rate. For ₹3 lakh at 24% over 1 year:
| Processing fee | Fee incl. GST | Money in hand | APR |
|---|---|---|---|
| 1% + GST | ₹3,540 | ₹2,96,460 | 26.33% |
| 2.5% + GST | ₹8,850 | ₹2,91,150 | 29.89% |
| 4% + GST | ₹14,160 | ₹2,85,840 | 33.55% |
Every lender must show the APR and total repayable amount in the Key Fact Statement before you sign. Compare offers on that figure, not on the headline rate. At a 2.5% fee, this loan's APR is about 29.89%.
Can you afford this EMI?
Lenders usually keep all your EMIs together within about 40% to 50% of net monthly income. For an EMI of ₹28,368 with no other loans, that means a take-home income of at least ₹57,000 at the 50% limit, and about ₹71,000 to stay within a more comfortable 40%. Existing EMIs, including credit card EMIs, reduce what is left for this one.
Divide the monthly EMI by your trading days to see the daily deduction, and check it leaves enough to pay suppliers on slow days.
How merchant loan EMI is calculated
Lenders use the reducing-balance formula: EMI = P × R × (1 + R)N ÷ ((1 + R)N − 1), where P is the loan amount, R is the yearly rate divided by 12 and by 100, and N is the number of monthly instalments.
For ₹3 lakh at 24% over 12 months, R is 0.02 and the EMI comes to ₹28,368. In the first month, ₹6,000 of it is interest and ₹22,368 repays principal. Each month the balance falls, so the interest part shrinks and the principal part grows. In the first year you pay about ₹40,415 in interest, which is 12% of what you pay in that period. The year-by-year schedule in the calculator shows the full split.
Before you apply for a merchant loan
The calculator tells you what the loan costs. Before you apply, check whether you qualify, what documents lenders ask for and the mistakes borrowers most often make.
Related EMI calculators
Planning tools
Merchant Loan EMI: frequently asked questions
What is the EMI for a merchant loan of ₹3,00,000?
At 24% a year for 1 year, the EMI is ₹28,368 and the total interest is ₹40,415. Over 9 months the EMI rises to ₹36,755 but the interest falls to ₹30,792.
How is merchant loan EMI calculated?
With the reducing-balance formula EMI = P x R x (1+R)^N / ((1+R)^N - 1), where R is the monthly rate and N the number of months. Interest is charged only on the balance still outstanding, so the interest part of each EMI falls over time.
Does the merchant loan EMI include the processing fee?
No. The EMI covers interest and principal. The processing fee, usually around 1% to 4% of the amount plus 18% GST, is generally deducted upfront. Use the APR in the Key Fact Statement to compare total cost.
How can I reduce my merchant loan EMI?
Choose a longer tenure, borrow less, or get a lower rate by improving your credit score or comparing lenders. A longer tenure lowers the EMI but raises the total interest, so pick the shortest tenure you can comfortably afford.
Is the rate in this calculator my actual merchant loan rate?
No. 24% is an example within the indicative range of about 15% to 36%. Your rate depends on the lender, your credit score, income and the loan details. Enter the rate in your own offer for an exact EMI.
Why is the APR on a short merchant loan higher than the rate?
Because the processing fee is paid once but spread over only a few months. Here a fee of about ₹8,850 on ₹3,00,000 over 1 year turns a 24% rate into an APR of about 29.9%.
Rates, fees and limits are indicative ranges for India, reviewed on the date above. KhatuLoans is not a lender and does not decide approval or pricing. Read our editorial policy and how we make money.
Official sources and further reading
These guides are written from Reserve Bank of India rules and official scheme pages. Rules, rates and scheme terms change, so check the current position on these sites and in your lender's Key Fact Statement before you apply.
- Udyam Registration Portal. The free government registration for micro, small and medium enterprises, needed for many MSME loan schemes.
- Pradhan Mantri MUDRA Yojana. The government scheme for collateral-free loans to small non-farm businesses.
- CGTMSE. The trust that guarantees collateral-free loans to micro and small enterprises through member lenders.
- RBI: Key Facts Statement (KFS) for loans and advances. The Reserve Bank of India notification that tells lenders to give every borrower a plain-language statement of the full cost of a loan.
- RBI Complaint Management System. Where to take a complaint against a bank, NBFC or other regulated lender if the lender does not resolve it.
- RBI (Pre-payment Charges on Loans) Directions, 2025. Bars pre-payment charges on floating-rate loans taken by individuals for non-business purposes, for loans sanctioned or renewed from 1 January 2026.
- Reserve Bank - Integrated Ombudsman Scheme, 2021. The single complaint scheme for customers of banks, NBFCs and other RBI-regulated lenders.
- RBI: Free Annual Credit Report to Individuals. Credit bureaus must give you one free full credit report with score every calendar year.
- RBI Financial Education. Consumer guidance from the Reserve Bank of India on borrowing, fraud and your rights as a customer.
Edited by Hemant Kumar. Rates on this site are indicative ranges, not offers.