Loan Calculator
Most borrowing decisions come down to three numbers you control unevenly: principal, rate and tenure. This calculator shows what each lever does to the instalment and to the total cost of credit, which is the comparison that actually separates a good personal loan offer from a bad one.
Inputs
Result
4,339.12 per month
Total payable 1,041,387.88 · Total interest 541,387.88
Visual breakdown
How it works
EMI = P × r × (1+r)^n / ((1+r)^n − 1)
- 1Monthly rate r = 8.5% ÷ 12 ÷ 100 = 0.007083
- 2Number of payments n = 240
- 3EMI = P × r × (1+r)^n / ((1+r)^n − 1) = 4,339.12
- 4Total interest = (EMI × n) − P = 541,387.88
How the loan calculator works
Every fixed-instalment loan uses the same amortisation formula: Instalment = P × r × (1 + r)^n ÷ ((1 + r)^n − 1). P is the amount borrowed, r the periodic rate, n the number of periods.
Total cost of credit = instalment × n − P. That subtraction is the figure worth optimising; lenders advertise the instalment because a longer tenure makes it look smaller while the interest total quietly grows.
Rate and tenure do not move the total symmetrically. Cutting the rate by a point saves a modest amount; halving the tenure can cut interest by more than half.
Worked example: 500,000 at 8.5%, 20 years vs 10 years
- Monthly rate: 8.5 ÷ 1,200 = 0.0070833.
- Over 240 months the instalment is about 4,338, and total repayment is 1,041,000 — roughly 541,000 in interest.
- Over 120 months the instalment rises to about 6,199, but total repayment falls to 743,900 — about 243,900 in interest.
- The shorter term costs 1,861 more each month and saves close to 297,000 across the life of the loan.
Common mistakes to avoid
Comparing offers on the monthly figure
A lower instalment stretched over more years is usually the more expensive loan. Always compare total repayment, and where possible the APR, which folds fees into the rate.
Forgetting processing fees and insurance
Origination fees, stamp duty and bundled credit insurance are often deducted from the disbursed amount, so you repay interest on money you never received.
Treating prepayment as always free
Some fixed-rate contracts charge 2–4% of the outstanding balance to settle early. Check the clause before planning a lump-sum payoff.
Frequently asked questions
What is the difference between flat and reducing-balance interest?
Flat interest is charged on the original principal for the whole term; reducing-balance charges only on what you still owe. A 10% flat rate is roughly equivalent to 17–19% reducing, so never compare the two numbers directly.
Does a longer tenure ever make sense?
Yes, when cash-flow safety matters more than total cost — for example while income is uncertain. You can always prepay later, provided the contract allows it.
How does credit score change the rate I am offered?
Score bands drive pricing tiers. On a 500,000 loan, a two-point rate difference between tiers is worth roughly 60,000 over 20 years, which is why a few months of score repair can pay for itself.
Should I take a shorter tenure or invest the difference?
Compare the loan rate with the after-tax return you realistically expect. Paying down 8.5% debt is a guaranteed 8.5% return; few portfolios beat that reliably.
What does amortisation actually mean?
It is the schedule that splits each equal payment into interest on the current balance and principal repayment. The split shifts toward principal as the balance falls.
Learn more
A Complete Loan Calculator Guide
Tenure, rate and principal — which lever actually saves money.
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