T/08Tool

Loan EMI

Work out the monthly payment (EMI) on any loan, how much interest you pay in total, and whether paying it off beats investing.

Your loan

Loan amount

Interest rate, per year

Home loans are usually lowest. Personal loans and credit cards are often 12–40%.

Loan length

What investing might earn instead

Used only to compare: is paying the loan off faster a better deal than investing?

Monthly payment (EMI)

$445

You borrow $20,000 and pay back $26,693. The extra $6,693 is the cost of borrowing.

Monthly payment: $445
Total interest: $6.7K
Total paid: $26.7K
Interest vs loan: 33%; Extra you pay on top

Where your payments go

Loan repaid
Interest paid
Still owed

Early payments carry the most interest. Over time, more of each payment reduces what you owe.

01Method

How this works.

Monthly payment: P × m ÷ (1 − (1 + m)^−n), where P is the loan, m the yearly rate ÷ 12, and n the number of months. Each month, interest is charged on what is still owed and the rest of the payment reduces the loan.

What it assumes

A fixed interest rate for the whole loan. Floating-rate loans change when rates change.
No processing fees, insurance, or prepayment charges, which raise the real cost.
The investing comparison is a rule of thumb: a loan's rate is certain, investment returns are not.

Worked example

Borrow $20,000 at 12% a year for 5 years and the monthly payment is about $445. Over the loan you pay about $6,693 in interest on top of what you borrowed.

Borrow ₹10,00,000 at 12% a year for 5 years and the monthly payment is about ₹22,244. Over the loan you pay about ₹3,34,667 in interest on top of what you borrowed.

Learn the idea behind it

Terms used here: Interest, Principal, Opportunity cost.

Every number here is a simplified illustration based on the inputs you choose. Returns are not guaranteed and real markets vary — sometimes a lot — year to year. This is education, not financial advice.