What is this calculator?
This calculator works out the monthly payment, total repayment, and total interest for a fixed-rate reducing-balance loan. It uses the same annuity mathematics as an EMI calculation — the two are the same computation under different names.
Use it when:
- You want the monthly payment for a loan at a given amount, rate, and term.
- You are comparing the total cost of two loans with different terms.
- You want to see how much of the total repayment is interest.
Intended for: Anyone evaluating or budgeting for a fixed-rate instalment loan.
How is this calculated?
- The annual interest rate you enter is converted to a monthly rate by dividing by 12 and by 100.
- The tenure is converted to a whole number of monthly instalments.
- A single instalment is solved for such that paying it every month for the full tenure clears both the principal and all interest accrued along the way — this is the standard annuity formula.
- Each month, interest is charged on the balance still outstanding, and whatever remains of the instalment reduces that balance. Early instalments are therefore mostly interest, later ones mostly principal.
- Total payment is the instalment multiplied by the number of instalments; total interest is that figure minus the principal.
Formulas
Monthly instalment
EMI = P × r × (1 + r)^n / ((1 + r)^n − 1)
The standard annuity formula: the one instalment that, repeated n times, exactly repays the principal plus all interest accrued on the reducing balance.
- P
- Principal — the amount borrowed
- r
- Monthly interest rate = annual rate ÷ 12 ÷ 100
- n
- Number of monthly instalments
Total interest
Total interest = (EMI × n) − P
Everything you pay beyond the amount borrowed. It grows quickly with tenure, which is why a longer loan lowers the instalment but raises the cost.
Example
A loan of 100,000 at 12% per year, repaid over 12 months.
- The monthly rate is 12 ÷ 12 ÷ 100 = 0.01.
- With n = 12, the annuity formula gives an instalment of about 8,884.88.
- Total payment is 8,884.88 × 12 ≈ 106,618.55.
Result: Monthly EMI ≈ 8,884.88, total repayment ≈ 106,618.55, total interest ≈ 6,618.55.
Frequently asked questions
Why does a longer tenure increase the total interest?
Interest is charged on the balance still outstanding. A longer tenure means the balance falls more slowly, so interest accrues on a larger amount for more months. The monthly instalment drops, but the total cost rises.
Is the EMI the same every month?
Yes, on a fixed-rate reducing-balance loan the instalment is constant. What changes is its composition: early instalments are mostly interest, later ones mostly principal.
Does this include processing fees, insurance, or GST?
No. The calculator uses only the principal, rate, and tenure you enter. Lenders often add one-time fees or bundled insurance, which raise the effective cost above what is shown here.
What happens if I make a prepayment?
A prepayment reduces the outstanding balance, so less interest accrues afterwards. This calculator models a loan run to term with no prepayments, so it does not show that saving.
Assumptions
What this calculator takes as given:
- The interest or return rate you enter is treated as fixed for the entire period.
- Every period is treated as equal in length; no calendar-day, leap-year, or day-count convention is applied.
- Interest is compounded monthly on the reducing balance, which is the standard convention for EMI loans.
- Every instalment is paid in full and on time, at the end of each month.
- The loan runs to full term with no prepayment, restructuring, or moratorium.
Limitations
What this calculator cannot know or does not model:
- Processing fees, insurance premiums, stamp duty, and taxes are not included — the result is the loan's interest cost only.
- Floating-rate loans, where the rate resets during the tenure, are not modelled.
- Penalties for late or missed payments are not modelled.
- Lenders may round the instalment differently, so a bank statement can differ from this result by a small amount.