📊 Loan Details

Currency

Loan Amount $200,000

$5K$1M$2M

Annual Interest Rate 6.8%

1%15%30%

Typical: 8–11% (home loan)

Loan Tenure 20 Yrs

1 Yr15 Yrs30 Yrs

Loan Type

Processing Fee optional

📈 Results

Monthly Payment

—

per month

Total Interest

—

total payable

Total Amount

—

principal + interest

Principal vs Interest

Year-wise Payment Breakdown

Amortization Schedule (First 12 Months)

#	Payment	Principal	Interest	Balance

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Enter Loan Details

Fill in the loan amount, interest rate, and tenure, then click Calculate Loan to see your results.

Formula

How Loan is Calculated

Loan is calculated using the standard reducing balance method

Monthly Payment Formula

M = P × r × (1 + r)ⁿ / [(1 + r)ⁿ − 1]

Where:
M = Monthly payment
P = Principal loan amount
r = Monthly interest rate (Annual rate ÷ 12 ÷ 100)
n = Loan tenure in months

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Reducing Balance Method

Interest is calculated on the outstanding principal each month, so your effective interest decreases as you repay.

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When to Use

Planning a home, car, or personal loan
Comparing loan offers from different banks
Checking affordability before applying
Understanding total interest cost over loan life

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Loan Tips

Longer tenure = lower payment but more interest
Prepayment reduces interest burden significantly
Compare effective interest rate (EIR), not just nominal rate
Keep monthly payment below 40% of take-home salary

FAQ

Frequently Asked Questions

Common questions about loan calculations

What is a monthly loan installment and how does it work?

A monthly loan installment (called EMI — Equated Monthly Installment — in some countries) is a fixed monthly payment made to a lender to repay a loan. Each payment consists of a principal component and an interest component. Early in the loan, the interest portion is higher; as the loan matures, the principal portion increases.

Does a higher down payment reduce my monthly payment?

Yes. A larger down payment reduces the principal loan amount, which directly reduces your monthly payment. For example, paying 30% down instead of 20% reduces the principal by 10%, saving significant interest over the full tenure.

What happens if I make prepayments?

Prepayments reduce the outstanding principal, which reduces total interest payable. You can either reduce your monthly payment (keeping tenure same) or keep the payment the same and reduce your loan tenure. Most lenders allow prepayments with minimal or no charges.

Is this calculator accurate for all loan types?

This calculator uses the standard reducing balance formula used by most banks and lenders globally. However, some loans may have processing fees, taxes on interest, or fixed interest periods. Always verify with your lender's official loan statement.

How does interest rate affect total loan cost?

Even a 0.5% difference in interest rate can significantly reduce total loan cost. On a typical 20-year home loan, a 0.5% lower rate saves roughly 5–8% of the total interest paid over the loan life. Always negotiate for the lowest rate possible.

🏦 Loan Calculator

How Loan is Calculated

Reducing Balance Method

When to Use

Loan Tips

Frequently Asked Questions

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