Loan Calculator
Calculate your monthly EMI payment, total interest cost, and full amortization schedule. Compare loan scenarios and find the best deal — in your language.
💰 Loan Calculator
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📋 Table of contents
What is a loan?
A loan is an amount of money borrowed from a lender — typically a bank, credit union, or financial institution — with the agreement to repay it over time with interest. Loans are used for everything from buying a home or car to covering education costs or unexpected expenses.
Every loan has three core components:
- Principal — the original amount borrowed.
- Interest — the fee charged by the lender for using their money, expressed as an annual percentage rate (APR).
- Term — the duration over which you repay the loan (usually in months).
Key insight: A longer loan term means lower monthly payments, but you pay significantly more interest overall. A shorter term costs more each month but saves you money in the long run.
How to calculate loan payments
Loan payments are calculated using the standard EMI (Equated Monthly Installment) formula. The monthly payment stays the same throughout the loan term, but the split between interest and principal changes each month — early payments are mostly interest; later payments are mostly principal.
- Identify the principal (loan amount), annual rate, and term in months.
- Convert the annual rate to a monthly rate: divide by 12 (and by 100).
- Apply the EMI formula to get the fixed monthly payment.
- Multiply by the total number of payments to get the total cost.
- Subtract the principal to find the total interest paid.
EMI formula explained
EMI = P × r × (1 + r)ⁿ ÷ [(1 + r)ⁿ − 1]
Where:
P = Principal loan amount
r = Monthly interest rate = (Annual rate %) ÷ 12 ÷ 100
n = Total number of payments (months)
Example:
Loan: $10,000 | Rate: 8.5% p.a. | Term: 60 months
r = 8.5 / 12 / 100 = 0.007083
n = 60
EMI = 10000 × 0.007083 × (1.007083)⁶⁰ ÷ [(1.007083)⁶⁰ − 1]
EMI = $205.17 per month
The total cost is $205.17 × 60 = $12,310.20. Total interest = $12,310.20 − $10,000 = $2,310.20.
Types of loans
| Loan Type | Typical Rate | Common Term | Secured? | Best For |
|---|---|---|---|---|
| Personal Loan | 6–36% | 1–7 years | No (unsecured) | Debt consolidation, expenses |
| Home Mortgage | 3–8% | 15–30 years | Yes (home) | Buying property |
| Auto Loan | 4–15% | 2–7 years | Yes (car) | Vehicle purchase |
| Student Loan | 3–12% | 10–25 years | No | Education costs |
| Business Loan | 5–30% | 1–25 years | Varies | Business growth |
| Credit Card | 15–30% | Revolving | No | Short-term expenses |
What is amortization?
Amortization is the process of paying off a loan through regular scheduled payments over time. Each payment covers two parts:
- Interest portion — calculated on the remaining balance (decreases over time).
- Principal portion — reduces the outstanding balance (increases over time).
In the early months of a loan, most of your payment goes toward interest. By the end, most goes toward principal. This is why making extra early payments saves the most interest — you're reducing the balance that future interest is calculated on.
Pro tip: Making just one extra payment per year on a 30-year mortgage can reduce the total loan term by 4–5 years and save tens of thousands in interest.
Tips to reduce your loan cost
- Make a larger down payment — reduces the principal, lowering both monthly payments and total interest.
- Choose a shorter term — saves interest, though monthly payments will be higher.
- Improve your credit score — a better score qualifies you for lower interest rates.
- Make extra payments — even small additional amounts toward principal each month can significantly shorten the loan.
- Refinance when rates drop — if market rates fall, refinancing locks in a lower rate on the remaining balance.
- Avoid unnecessary fees — compare origination fees, prepayment penalties, and processing charges between lenders.
- Pay bi-weekly instead of monthly — results in 26 half-payments per year (equivalent to 13 monthly payments) rather than 12.
Frequently Asked Questions
The formula is: EMI = P × r × (1+r)ⁿ ÷ [(1+r)ⁿ − 1], where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12 ÷ 100), and n is the number of monthly payments. This ensures each payment is equal while gradually shifting the balance from interest to principal.
The interest rate is the percentage charged on the principal only. APR (Annual Percentage Rate) is a broader measure that includes the interest rate plus all additional fees (origination fees, insurance, etc.) expressed as a yearly rate. APR is always higher than the stated interest rate when fees are present, making it a more accurate comparison tool.
Missing a payment typically results in a late fee, a negative mark on your credit report (usually after 30 days), and increased interest accrual on the outstanding balance. Repeatedly missing payments can lead to default, which may result in the lender sending the debt to collections or taking legal action.
Usually yes — paying off a loan early saves you all the interest that would have accrued on the remaining balance. However, check for prepayment penalties first, as some lenders charge a fee for early payoff. Also compare the loan interest rate against what you might earn by investing the extra money instead.
A secured loan is backed by collateral (an asset like a house or car) that the lender can seize if you default. Because there's less risk for the lender, secured loans typically have lower interest rates. An unsecured loan (like a personal loan or credit card) requires no collateral, but carries a higher interest rate to compensate for the lender's risk.
A longer loan term reduces your monthly payment but dramatically increases total interest paid. For example, a $20,000 loan at 8% for 3 years costs $626/month and $2,532 in interest. The same loan over 7 years costs $311/month but $6,082 in interest — more than double. Use the amortization table in this calculator to see the exact difference.