With a loan against securities you service only the monthly interest. The concept of an EMI (equated monthly instalment) does not apply, and the principal can be repaid any time during the tenure.
How it is computed
- Annual interest = loan amount x interest rate per annum
- Daily interest = annual interest / 365
- Monthly interest (30 days) = daily interest x 30
Example
A loan of Rs. 2,50,000 at 11% per annum:
- Annual interest = 11% of Rs. 2,50,000 = Rs. 27,500
- Daily interest = Rs. 27,500 / 365 = Rs. 75.34
- Monthly interest (30 days) = Rs. 75.34 x 30 = Rs. 2,260.27
You can work this out for your own loan amount using the interest calculator.
When to pay it
The interest payment must be made between the 1st and 7th of every month from the Zerodha Capital dashboard, using the Make repayment option. Penal charges of 18% per annum on the outstanding interest apply only if there is a default.