EMI, total interest, and total payment.
Monthly EMI
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Total interest
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Total payment
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Worked example
Take a loan of Rs 20,00,000 at 9 percent annual interest over 15 years. The monthly interest rate is 9 percent divided by 12, which is 0.75 percent, and the tenure is 15 times 12, or 180 months. Putting these into the EMI formula gives a fixed monthly instalment of about Rs 20,285. Over the full 180 months you repay roughly Rs 36,51,360, so the total interest is about Rs 16,51,360, which is close to 83 percent of the amount you borrowed. The EMI stays the same every month on a fixed-rate loan, but the split inside it shifts: in the first month nearly Rs 15,000 of the Rs 20,285 is interest and only about Rs 5,285 reduces the principal, while in the final months almost the whole EMI goes to principal.
| Step | Value |
|---|---|
| Loan amount (P) | Rs 20,00,000 |
| Monthly rate (r) | 0.75 percent |
| Months (n) | 180 |
| Monthly EMI | Rs 20,285 |
| Total payable | Rs 36,51,360 |
| Total interest | Rs 16,51,360 |
How it is calculated
The calculator uses the standard reducing-balance EMI formula. The instalment equals the principal P multiplied by the monthly rate r and by (1 plus r) raised to the power n, all divided by the same growth factor minus one. Here r is the annual rate divided by 12 and n is the number of months. Because the loan is on a reducing balance, interest each month is charged only on the amount still outstanding, so as the principal falls the interest portion of every EMI shrinks and the principal portion grows. The total interest is simply the EMI multiplied by the number of months, minus the original loan. Lower rates, shorter tenures, and any prepayment all cut the total interest, and prepayments early in the loan save the most because that is when the outstanding balance, and therefore the interest, is highest.