Convert a traditional "₹ per 100 per month" interest rate into a clear annual percentage.
This tool is for understanding the real cost of a rate you've been quoted — it's not financial advice. Compare against formal bank or NBFC loan rates before borrowing.
This traditional phrasing, common with informal lenders, means ₹2 of interest is charged per ₹100 borrowed, per month. That's a 2% monthly rate, which sounds small but adds up fast once converted to an annual figure.
The simple annual rate is the monthly rate multiplied by 12 — so ₹2 per 100 per month becomes 24% per year on a simple basis. This calculator also shows the effective annual rate assuming the interest compounds monthly, which is usually higher and closer to what you'd actually pay if interest isn't settled each month.
If unpaid interest gets added to the principal each month (rather than paid off), you start owing interest on that interest too — the same compounding effect used in savings accounts, just working against a borrower instead of for a saver.
Often yes. Many formal bank personal loans in India carry annual rates well below what a ₹2-3 per 100 per month informal rate converts to. This calculator is meant to make that comparison clear and easy to check before agreeing to any informal lending terms.