Loan Calculator Guide: Monthly Payment, Total Cost & Amortisation
Before signing a loan agreement, calculate exactly what you'll pay each month and in total. Understanding amortisation saves you from costly surprises.
The Loan Payment Formula
Tenure vs. Total Interest
| ₹10L @ 9% | 3 yr | 5 yr | 7 yr | 10 yr |
|---|---|---|---|---|
| Monthly | ₹31,799 | ₹20,758 | ₹16,089 | ₹12,668 |
| Total interest | ₹1.45L | ₹2.45L | ₹3.51L | ₹5.20L |
Frequently Asked Questions
What is the difference between a loan calculator and an EMI calculator?
They calculate the same thing. An EMI (Equated Monthly Instalment) calculator is the Indian term; a loan payment calculator is the global term. Both use the same formula: P × r × (1+r)ⁿ ÷ [(1+r)ⁿ - 1] to find the monthly payment.
How do I calculate the total cost of a loan?
Total cost = Monthly Payment × Number of Months. Total Interest Paid = Total Cost − Principal. For example, a ₹5,00,000 loan at 10% for 5 years has a monthly payment of ₹10,624 and a total cost of ₹6,37,440, meaning ₹1,37,440 in interest.
Does a longer loan tenure save money?
A longer tenure lowers your monthly payment but increases total interest paid significantly. A ₹10L loan at 9% for 5 years costs ₹2.45L in interest; the same loan for 10 years costs ₹5.20L. Always try to choose the shortest tenure your budget allows.
What is an amortisation schedule?
An amortisation schedule is a table showing each monthly payment broken down into principal and interest portions. Early payments are mostly interest; later payments are mostly principal. It helps you see exactly how your loan balance reduces over time.
Can I pay off a loan early?
Yes. Making extra payments reduces the outstanding principal directly, which reduces total interest. However, some lenders charge a prepayment penalty (typically 1–3% of the outstanding balance). Always check your loan agreement before prepaying.
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