The Loan Calculator tells you three things every borrower needs to know before signing a loan agreement: the fixed monthly instalment (EMI), the total interest you'll pay over the life of the loan, and the overall repayment. It works for home loans, car loans, personal loans, education loans and small-business loans.
The EMI formula
EMI = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)
- P — principal (the amount borrowed).
- r — monthly interest rate = annual rate ÷ 12 ÷ 100.
- n — number of monthly instalments = years × 12.
Step-by-step example
Borrow 100,000 at 8.5% p.a. for 5 years. r = 8.5 ÷ 12 ÷ 100 = 0.007083. n = 60. Plug in: EMI ≈ 2,052.85. Total repayment ≈ 123,171. Total interest ≈ 23,171 — that's what the loan actually costs you on top of the borrowed amount.
Types of loans this covers
- Home loans — usually 10 to 30 years, rates from 6–9%.
- Car loans — 3 to 7 years, rates 5–12%.
- Personal loans — 1 to 5 years, rates 10–24%.
- Education loans — 5 to 15 years, often with moratorium periods.
- Business term loans — 1 to 10 years, secured or unsecured.
Tips to save money on any loan
- Compare APR (all-in cost), not just the flat interest rate. Processing fees add 0.5–2%.
- A shorter tenure hurts monthly cash flow but slashes total interest — often by 30–50%.
- Even one extra EMI per year knocks years off a home loan because the extra hits principal.
- Keep your credit score above 750 to unlock the lowest advertised rates.
Common mistakes
- Focusing only on the EMI. A "comfortable" EMI over 30 years can double the price of a house.
- Ignoring insurance, GST and processing fees that inflate the effective cost.
- Choosing floating-rate loans in a rising-rate environment without a stress-test buffer.
Frequently asked questions
What is EMI?+
EMI stands for Equated Monthly Instalment — a fixed monthly payment covering both principal and interest over the loan tenure. The interest share shrinks and the principal share grows as the loan progresses.
How is EMI calculated?+
EMI = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1), where P is the principal, r is the monthly interest rate (annual ÷ 12 ÷ 100) and n is the number of months.
Does the calculator include processing fees?+
No. It shows pure EMI, total interest and total repayment. Add processing fees, insurance and GST separately when comparing loan offers.
Can I prepay a loan?+
Yes, most banks allow prepayment. Even one extra EMI a year can cut a 20-year home loan by 4–5 years, because prepayments hit principal directly.
Which is better — shorter or longer tenure?+
Shorter tenure = higher EMI but far less total interest. Longer tenure feels affordable but you pay much more overall. Aim for the shortest tenure your cash flow tolerates.