Loan Calculator

About Loan Calculator

A loan calculator estimates your monthly payment (EMI) along with the total interest and total cost over the life of a loan. Enter the loan amount, annual interest rate, and term in years or months, and it applies the standard amortization formula to show what you'll pay each month and overall. It works for personal, auto, and other fixed-rate loans, instantly in your browser.

How the payment is worked out

A fixed-rate loan uses the amortization formula, which finds the one constant payment that clears the balance exactly at the end of the term. It takes the principal, the periodic rate — the annual rate divided by twelve — and the number of payments. Every instalment is identical, but what it is composed of changes every month.

Each payment first covers the interest accrued on the outstanding balance, and whatever is left reduces the principal. Because the balance falls, the interest portion falls with it and the principal portion grows. That is the whole mechanism, and it explains the behaviour that surprises people most.

Why early payments barely touch the balance

On a 25-year loan of 200,000 at 6%, the monthly payment is about 1,289. The first payment includes roughly 1,000 of interest and only about 289 of principal. After a full year of payments the balance has fallen by only around 3,600 — under 2% — despite having paid more than 15,000.

The ratio flips slowly and then quickly. Around two-thirds of the way through the term, most of each payment is finally going to principal. This is not a trick by the lender; it is the arithmetic of charging interest on an outstanding balance. But it is why leaving a long loan early costs far more than the elapsed fraction of the term suggests.

Term length and total cost

Extending the term lowers the monthly payment and raises the total substantially. That same 200,000 at 6% costs about 1,289 a month over 25 years and about 1,432 over 20 — 143 less per month for the longer term, but roughly 43,000 more paid in total. The monthly figure is what people compare; the total is what they actually pay.

Overpaying works in the opposite direction and is disproportionately powerful early on, because every extra unit of principal removed stops accruing interest for the entire remaining term. An extra 100 a month on that loan clears it several years sooner. Check for early-repayment charges first — some fixed-rate products penalise exactly this.

Rate versus APR, and what is not included

The interest rate prices the borrowing; the APR folds in compulsory fees — arrangement, booking, some insurance — and expresses the whole cost as an annual percentage. Two loans with the same headline rate can have quite different APRs, which is why APR is the number to compare offers on. Where the two diverge sharply, the fees are doing the work.

This calculator models a fixed-rate loan and nothing else. It does not know about variable rates that can move, property taxes or insurance bundled into a mortgage payment, balloon payments, or the day-count conventions some lenders apply. Treat the output as a close estimate for planning, and the lender's own illustration as the number that binds.

Frequently asked questions

What is EMI?

EMI (Equated Monthly Installment) is the fixed amount you pay each month, covering both interest and principal, so the loan is fully repaid by the end of the term.

How is the monthly loan payment calculated?

It uses the standard amortization formula from the loan amount, monthly interest rate, and number of payments. A 0% rate simply splits the amount evenly across the term.

Can I use this as a personal or auto loan calculator?

Yes. Any fixed-rate loan works — personal, auto, or student. Enter the amount, rate, and term; it doesn't add down payment, trade-in, or sales tax specific to car deals.

Does this include taxes or fees?

No. It calculates principal and interest only. Add taxes, insurance, or fees separately for a full cost picture.