Your monthly instalment, the true interest cost, and what overpaying actually saves you.
Works for home loans, car loans and personal loans in any currency.
Every mainstream lender uses the same reducing-balance formula:
EMI = P × i × (1+i)n ÷ ((1+i)n − 1)
P = loan amount · i = monthly rate (annual ÷ 12 ÷ 100) · n = number of monthly payments.
Interest each month is charged on the outstanding balance, which is at its largest on day one. On a 250,000 loan at 5.5% over 20 years, the first payment is roughly 1,146 — of which about 1,146 × 55% is interest. By the final year almost the whole payment goes to principal. This is why the amortisation table above matters more than the headline rate: it shows where your money actually goes.
An extra payment comes off the principal directly, so it removes not just that amount but every future month of interest that amount would have generated. On a long loan, a modest overpayment early can cut years off the term. Enter a figure in the extra-payment field to see the exact saving on your own numbers.
Processing fees, insurance, early-settlement penalties and rate changes on a variable loan are not modelled. Check whether your lender charges a prepayment penalty before overpaying — in some markets it cancels out the benefit.
Equated Monthly Instalment — a fixed monthly payment covering both interest and principal, so the loan is fully repaid by the end of the term.
Because interest is charged every month on the balance still outstanding. On a 20-year loan at 5.5% you repay roughly 165% of what you borrowed. The amortisation table shows the split year by year.
By default most lenders keep the EMI the same and shorten the term, which is what this calculator models. Some will instead recalculate a lower EMI over the original term. Ask your lender which they do — shortening the term saves far more interest.
The payment maths is identical. A mortgage additionally involves a deposit, property price and affordability limits — use the mortgage affordability calculator for that.
No. It assumes the rate is fixed for the whole term. For a floating loan, run it once at today's rate and again a few points higher to see your exposure.