How to use the loan calculator
- Enter the loan amount you plan to borrow (after any down payment).
- Enter the yearly interest rate your lender quoted (APR).
- Enter the term in years or months.
Your monthly payment, total interest and a year-by-year schedule update instantly as you type.
The loan payment formula
Fixed-rate loans use the standard amortization (EMI) formula:
M = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)
- M = monthly payment
- P = principal (the amount borrowed)
- r = monthly interest rate (yearly rate ÷ 12 ÷ 100)
- n = number of monthly payments
Example: borrowing 20,000 at 12% for 5 years gives r = 0.01 and n = 60, so the monthly payment is about 444.89. Over the full term you pay roughly 6,693 in interest.
Tips before you take a loan
- Compare the total cost, not just the monthly payment. A longer term lowers the payment but can double the interest you pay.
- Check for fees. Processing fees and insurance increase the real cost of borrowing.
- Keep payments affordable. A common guideline is to keep all debt payments under about a third of your take-home pay.
Frequently asked questions
What is EMI?
EMI stands for Equated Monthly Installment. It is the fixed amount you repay every month, made up of part interest and part principal. Early payments are mostly interest; later payments are mostly principal.
Does this work for mortgages and car loans?
Yes. Any loan with a fixed interest rate and fixed monthly payments — mortgages, car loans, personal loans, student loans — uses the same formula. Enter the amount you borrow after any down payment.
Why is my bank's figure slightly different?
Banks may add fees, insurance or taxes to the monthly payment, or calculate interest daily rather than monthly. This calculator shows the core principal-and-interest payment.
How can I pay less interest?
Choose a shorter term, negotiate a lower rate, or make extra payments toward principal. Even small extra payments early on cut total interest noticeably, because interest is charged on the remaining balance.