How to use it
- Enter the loan amount, the yearly interest rate and the number of years.
- Read the monthly payment, total amount paid and total interest.
- Use the schedule to see how the balance falls each year.
The EMI formula
EMI = P × i × (1 + i)ⁿ ÷ ((1 + i)ⁿ − 1), where P is the loan amount, i the monthly rate (yearly rate ÷ 12) and n the number of monthly payments.
Worked example
A loan of 25,000 at 7.5% for 5 years: i = 0.075 ÷ 12 = 0.00625 and n = 60. The monthly payment is 500.95. Over 60 months you pay 30,056.92, so the interest costs 5,056.92.
Why early payments are mostly interest
Each month, interest is charged on the remaining balance. At the start the balance is highest, so more of each payment goes to interest. As the balance falls, more goes to principal. The schedule shows this shift year by year.
How the term changes the cost
A longer term lowers the monthly payment but raises the total interest. A 200,000 loan at 6% over 30 years costs 1,199.10 a month, but 231,676.38 in interest over the life of the loan.
Frequently asked questions
What does EMI stand for?
Equated monthly installment: a fixed payment that covers both interest and principal.
Does this include fees or insurance?
No. It covers principal and interest only. Real loans may add fees, taxes or insurance.
What happens at 0% interest?
The payment is simply the loan amount divided by the number of months.
Is this financial advice?
No. It shows the math. Check the exact terms with your lender.