Loan / EMI Calculator

The number the advert does not lead with

Loan offers are usually sold on the monthly payment, because a small monthly figure feels manageable. What decides whether a loan is actually a good deal is the total you repay, and that depends on the interest rate and the term together. Stretching a loan over a longer period lowers the monthly payment and raises the total cost, sometimes substantially. Seeing both figures at once is the only way to compare two offers honestly.

How an EMI is worked out

An Equated Monthly Instalment keeps your payment the same every month while the split inside it changes. Early payments are mostly interest with a small amount going to the principal. As the balance falls, more of each payment attacks the principal and less goes to interest. That is why overpaying early has a far larger effect than overpaying near the end, and why the first years of a long loan barely dent the balance.

Before you commit

• Compare the total repayment, not just the monthly figure.
• Try a shorter term and see how much total interest it saves.
• Check whether overpaying carries a penalty. Many loans allow some free overpayment.
• Ask what else is added, since arrangement fees and insurance are often outside the quoted rate.
• This is a general calculator. A lender's own figures are the ones that count.