Before you sign any loan agreement, you should know three numbers: the monthly payment, the total interest and the total cost of the loan. This loan calculator works out all three for any fixed-rate amortizing loan, and gives you a repayment schedule that shows how each payment is split between principal and interest. Use it to compare offers from different lenders, to decide on a tenure, or to check whether a loan fits your monthly budget.
How to use the loan calculator
- Enter the loan amount, which is the money actually credited to you.
- Enter the annual interest rate quoted by the lender. If you only have a flat rate, see the section on flat rates below.
- Enter the tenure in years, then press Calculate Loan Repayment.
- Look at the total interest and the schedule. Change the tenure or rate to see how the cost moves.
The amortization formula
Almost every consumer loan in India, including personal, gold, two-wheeler, car and home loans, is an amortizing loan. You pay the same amount every month, and the loan reaches zero at the end of the tenure. The payment is:
r = annual rate ÷ 12 ÷ 100 n = tenure in months
Every month, interest is charged on the balance still outstanding: balance × r. The rest of your payment reduces the balance. Early payments are mostly interest and later payments are mostly principal.
Comparing two loan offers
A lower interest rate does not always mean a cheaper loan. Fees, insurance bundled into the loan and the tenure all change the real cost. Here is an example for a ₹5 lakh personal loan:
| Offer A | Offer B | |
|---|---|---|
| Interest rate | 10.5% | 11.0% |
| Tenure | 5 years | 3 years |
| Processing fee | 2% (₹10,000) | ₹1,999 flat |
| Monthly payment | ₹10,747 | ₹16,369 |
| Total interest | ₹1,44,817 | ₹89,297 |
| Interest + fees | ₹1,54,817 | ₹91,296 |
Offer A has the lower rate and the smaller monthly payment, but it costs about ₹63,500 more overall. If you can manage the higher payment, Offer B is far cheaper. Run both offers through the calculator and add the fees yourself to compare them properly.
APR: the true cost of borrowing
The Annual Percentage Rate (APR) combines the interest rate with compulsory charges such as the processing fee to give one comparable figure. RBI requires regulated lenders to show the APR on the Key Fact Statement (KFS) for retail and MSME loans. Always ask for the KFS and compare APRs rather than headline rates. A loan advertised at 10.5% with a 2% fee works out to an APR of around 11.4% over five years.
How much loan can you afford?
Lenders look at your FOIR (fixed obligations to income ratio): all your EMIs, including the new one, divided by your net monthly income. Many banks cap this at 40–55% depending on income level. A simple personal rule:
- Keep total EMIs below 40% of take-home pay.
- Keep an emergency fund of at least 6 months of EMIs plus essential expenses.
- Avoid borrowing for things that lose value quickly, such as gadgets or holidays, at personal-loan rates above 14–15%.
Affordability check
Take-home pay of ₹80,000 a month × 40% = ₹32,000 available for all EMIs. With an existing car EMI of ₹12,000, you have about ₹20,000 left. At 11% over 5 years, that supports a personal loan of roughly ₹9.2 lakh.
Flat interest rate vs reducing balance
Some lenders, especially for two-wheelers, appliances and microfinance, quote a flat rate. Interest is then calculated on the full original amount for the whole tenure:
₹1 lakh at 10% flat for 3 years means ₹30,000 interest and a monthly payment of ₹3,611. To match that payment on a reducing balance, you would need a rate of about 17.9%. Always convert a flat-rate quote before comparing it with a bank’s reducing-balance rate.
Secured vs unsecured loans
Secured loans are backed by an asset, such as a home loan, car loan, gold loan or loan against FD or property. They carry lower rates because the lender can recover the asset if you default. Unsecured loans, such as personal loans, credit-card EMIs and Buy Now Pay Later, depend only on your income and credit score, so they cost more. If you have an FD or gold, a loan against it can be much cheaper than a personal loan.
For a dedicated home-loan or EMI breakdown with tenure comparisons, see the EMI Calculator and Mortgage Calculator.
Frequently asked questions
How do I calculate the monthly payment on a loan?
Use P × r × (1 + r)^n ÷ [(1 + r)^n − 1], where P is the loan amount, r is the annual rate ÷ 1200 and n is the number of months. The calculator does this for you and also shows total interest and the repayment schedule.
What is the difference between interest rate and APR?
The interest rate is only the cost of borrowing the principal. APR also includes compulsory charges such as processing fees, which makes it the better figure for comparing loans. In India, regulated lenders must show the APR in the loan’s Key Fact Statement.
How do I convert a flat interest rate to a reducing rate?
Calculate the monthly payment under the flat rate (principal plus flat interest, divided by months). Then find the reducing-balance rate that gives the same payment. As a rough guide, the reducing rate is about 1.7–1.9 times the flat rate for 1–5 year loans.
Should I choose a shorter or longer loan tenure?
A shorter tenure means a higher monthly payment but much less total interest. Choose the shortest tenure whose payment stays comfortably within about 40% of your take-home pay.
Does paying extra each month reduce the loan faster?
Yes. Extra payments go straight to the principal, so you pay less interest from then on and finish the loan earlier. Check whether your lender charges a part-prepayment fee. For floating-rate loans to individuals, RBI does not allow one.