Loan EMI Calculator
Plan home, car, and personal loans with exact amortizations.
Monthly Payment
Monthly EMI
₹9,847
Principal Amount
₹10,00,000
Total Interest Payable
₹7,72,536
Total Payment (P + I)
₹17,72,536
Yearly Amortization Schedule
| Year | Principal Paid | Interest Paid | Total Payment | Remaining Balance |
|---|
Understanding Loan EMIs and Amortization Schedules
An Equated Monthly Installment (EMI) is a fixed payment amount made by a borrower to a lender at a specified date each calendar month. EMIs are structured to pay off both the loan principal and interest over a set tenure.
The Math Behind Reducing Balance EMIs
Lenders calculate EMI amounts using the reducing balance method. The formula is:
EMI = [P x r x (1 + r)^n] / [((1 + r)^n) - 1]
Where:
- P = Principal loan amount.
- r = Monthly interest rate (annual rate / 12 / 100).
- n = Tenure in months.
Deciding on the Ideal Loan Tenure
Your loan tenure affects both your monthly budget and your total borrowing cost:
- Shorter Tenures: Require higher monthly EMIs but reduce the total interest paid over the life of the loan.
- Longer Tenures: Lower the monthly EMI, making payments manageable, but increase the total interest paid.
Contextual Borrowing Tools
To compare different loan interest offers side-by-side, use our Loan Comparison Tool. For checking long-term compound growth of your savings, visit our SIP Calculator.
Frequently Asked Questions
What is a reducing balance interest rate?
It is an interest calculation method where the interest is calculated monthly on the remaining principal balance, rather than the initial loan amount. This reduces the total interest paid over time.
How does tenure affect the total interest paid on a loan?
A longer tenure lowers your monthly payment but increases the total interest paid. A shorter tenure increases your monthly payment but reduces the total interest cost.