How Loan (EMI) Payments Are Calculated
This calculator uses the standard amortization formula: M = P × r × (1 + r)^n / ((1 + r)^n − 1), where P is the loan principal, r is the monthly interest rate (annual rate ÷ 12 ÷ 100), and n is the total number of monthly payments (years × 12). This is the same formula banks and lenders use to determine a fixed Equated Monthly Installment (EMI) for personal loans, auto loans, and other fixed-rate installment loans.
Why Total Interest Matters
The monthly payment only tells part of the story — the total interest figure shows exactly how much extra you'll pay over the life of the loan beyond the amount you borrowed. Longer loan terms usually mean lower monthly payments but significantly more interest paid overall, while shorter terms mean higher payments but much less interest. Comparing these numbers across different rates and terms helps you choose the loan structure that fits your budget and long-term cost tolerance.
FAQ
Does this work for auto loans and personal loans?
Yes, this calculator works for any fixed-rate, fixed-term installment loan including personal loans, auto loans, and student loans — anywhere payments are equal each month.
What if my interest rate is 0%?
With a 0% rate, the monthly payment is simply the loan amount divided by the number of months, and total interest will show as $0.
Does this include fees or insurance?
No, this calculator only computes principal and interest based on the amount, rate, and term you enter. Fees, taxes, and insurance are not included.