Calculate your working capital loan interest
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.
Working capital limits such as a cash credit or overdraft charge interest only on the amount you draw and for the days you use it, not on the full sanctioned limit.
Working Capital 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 ₹1 lakh to several crore, depending on turnover, stock, receivables and lender |
| Tenure | Revolving limits are reviewed annually; working capital term loans run 1 to 5 years |
| Indicative interest rate | Roughly 9% to 24% a year, depending on lender, security and profile |
| Processing fee | Often around 0.5% to 2% of the limit plus GST, sometimes charged again at renewal |
| Security / collateral | Hypothecation of stock and receivables, often with collateral or a guarantee; small unsecured limits exist |
| Typical time to disbursal | A few days for small unsecured limits; two to four weeks for larger secured limits |
From our Working Capital Loan guide. Ranges are indicative; your offer may differ.
Interest by how much you draw
On a limit of ₹20 lakh at 12% for 1 year:
| Amount drawn | Interest a month | Interest for 1 year |
|---|---|---|
| 25% (₹5 lakh) | ₹5,000 | ₹60,000 |
| 50% (₹10 lakh) | ₹10,000 | ₹1,20,000 |
| 75% (₹15 lakh) | ₹15,000 | ₹1,80,000 |
| 100% (₹20 lakh) | ₹20,000 | ₹2,40,000 |
Drawing the full limit all the time would cost ₹2,40,000; using 60% costs ₹1,44,000. A term loan works differently: you repay principal with every EMI, so the balance falls and a term loan of ₹12 lakh over 1 year would cost about ₹79,423 in interest. The credit line wins when you need the money only part of the time or can repay it quickly; a term loan is usually cheaper for a fixed amount you need for the whole period.
How the rate changes the cost
Rates vary by lender and by what you pledge or how your account is rated. On ₹12 lakh drawn for 1 year:
| Rate a year | Interest a month | Interest for 1 year |
|---|---|---|
| 9% | ₹9,000 | ₹1,08,000 |
| 12% | ₹12,000 | ₹1,44,000 |
| 24% | ₹24,000 | ₹2,88,000 |
Use it like a line of credit
Draw only when you need stock or to bridge receivables, and bring the balance down when customers pay, so you are not paying interest on idle money.
How the interest is calculated
Interest on a credit line is worked out on the daily outstanding balance: interest = amount drawn × yearly rate × days ÷ 365. Most lenders debit it monthly. The calculator uses the average amount drawn over the period, so if your balance moves a lot, use a realistic average. Renewal or annual fees are not included.
Before you apply for a working capital 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
Working Capital Loan EMI: frequently asked questions
How is interest charged on a working capital loan?
Only on the amount you draw and only for the days it is outstanding. Here ₹12,00,000 for 1 year at 12% costs about ₹1,44,000.
Is there an EMI on a working capital loan?
Usually not. Most are run as an overdraft or limit, where you pay interest monthly and repay the principal when you can, within the limit's validity. Some lenders offer a term loan version with EMIs.
Is a credit line cheaper than a term loan?
Only if you use it flexibly. Holding ₹12,00,000 for 1 year costs about ₹1,44,000 here, while a term loan of the same amount repaid by EMIs costs about ₹79,423, because its balance falls every month. Draw only when needed and repay early to keep the line cheaper.
Are there other charges?
Processing fees of about 0.5% to 2% of the limit plus GST may apply, and some lenders charge again on renewal. Check the Key Fact Statement.
What rate will I get?
Indicative rates run about 9% to 24% a year. Your rate depends on the lender and your profile, so enter your own offer in the calculator.
What happens if I do not repay on time?
Interest keeps running and penal charges may apply. Late payments are reported to credit bureaus and can affect future borrowing.
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.