Loan Calculator

What does this Loan Calculator do?

This calculator estimates the monthly payment for any amortizing loan — home, auto, or personal — using the same standard formula banks use to compute equal monthly installments over the life of a loan.

The formula

Payment = P × r × (1 + r)ⁿ ÷ [(1 + r)ⁿ − 1], where P is the loan amount, r is the monthly interest rate, and n is the number of monthly payments.

Step-by-step example

For a ₹25,00,000 home loan at 9% annual interest over 15 years (n = 180 months, r = 0.0075): monthly payment ≈ ₹25,356. Over the full term, total payments ≈ ₹45,64,080, meaning total interest paid ≈ ₹20,64,080.

Tips & common mistakes

• This estimate covers principal and interest only — it does not include property taxes, homeowner's insurance, PMI, or loan origination fees, all of which add to your actual monthly cost on a real mortgage.
• Shortening the loan tenure increases the monthly payment but substantially reduces total interest paid — worth modeling both ways before committing.
• Fixed-rate and variable-rate loans behave very differently over time — this calculator assumes a fixed rate for the entire tenure.

Fixed-rate versus variable-rate loans

This calculator assumes a fixed interest rate for the entire loan term, which is the simpler and more predictable case. Variable-rate (or floating-rate) loans adjust their rate periodically based on a benchmark rate, meaning your actual EMI or total interest can differ from a fixed-rate projection — useful to keep in mind if you're comparing a fixed-rate offer against a variable-rate one.

What affects your approved loan amount

Lenders typically look well beyond just the loan calculation itself — income, existing debt obligations, credit history, and the loan-to-value ratio (for secured loans like mortgages) all factor into what amount and rate you're actually offered, separate from the pure amortization math this calculator handles.

Secured versus unsecured loans

Secured loans (backed by collateral like a home or car) typically carry lower interest rates than unsecured loans (like most personal loans), because the lender has recourse to the asset if you default. This is a major reason personal loan rates tend to run meaningfully higher than mortgage or auto loan rates for a similarly qualified borrower.

How your credit profile affects the rate you're offered

Lenders price loans based on perceived risk — a stronger credit history, stable income, and lower existing debt typically unlock lower rates, while the same loan amount and tenure can cost a less creditworthy borrower substantially more in interest over the loan's life, even though the amortization formula itself is identical.

A worked example: auto loan

A ₹8,00,000 auto loan at 10% annual interest over 5 years (n = 60 months, r = 0.008333): monthly payment ≈ ₹17,003. Total payments ≈ ₹10,20,180, meaning total interest ≈ ₹2,20,180 over the life of the loan.

Frequently asked questions