What is the Loan Calculator?
The Loan Calculator estimates your monthly loan payment, total repayment amount, and total interest across the full loan term. It works for any type of amortizing loan including personal loans, auto loans, home loans, and business loans. Understanding these three numbers helps you evaluate whether a loan fits your budget and how much it will cost in total.
How does it work?
Enter the principal amount you plan to borrow, the annual interest rate, and the loan term in years. The calculator applies the standard amortization formula to determine the fixed monthly payment. It then multiplies that payment by the number of months to find the total repayment, and subtracts the principal to reveal the total interest cost.
Formula
M = P x r x (1+r)^n / ((1+r)^n - 1)
How the calculation works
How the calculation works
- 1Enter the principal you plan to borrow
- 2Convert the annual rate to a monthly rate: r = annual rate / 12 / 100
- 3Compute the number of payments: n = years x 12
- 4Monthly payment M = P x r x (1 + r)^n / ((1 + r)^n - 1)
- 5Total payment = M x n, and total interest = total payment - principal
Worked example
Worked Example
Meera is expanding her bakery in Jaipur and needs Rs 5,00,000 for a new oven and shop fit-out, offered at 8% annual interest over 5 years.
- 1Step 1: Principal P = Rs 5,00,000, monthly rate r = 8 / 12 / 100 = 0.006667
- 2Step 2: Number of payments n = 5 x 12 = 60, and (1.006667)^60 = 1.48985
- 3Step 3: Monthly payment = 500000 x 0.006667 x 1.48985 / (1.48985 - 1) = Rs 10,138.20
- 4Step 4: Total payment = 10,138.20 x 60 = Rs 6,08,291.83
- 5Step 5: Total interest = 6,08,291.83 - 5,00,000 = Rs 1,08,291.83
Result
Meera's monthly payment is Rs 10,138.20. Over 5 years she repays Rs 6,08,291.83 in total, including Rs 1,08,291.83 in interest - a 21.7% mark-up over the principal she borrowed.
Interpretation guide
How to read your result
Available to borrowers with excellent credit for secured loans like home loans or gold loans
Lock in the tenure you need; the interest drag at this rate is modest
The common band for personal, auto, and business loans in India
Model different tenures to balance monthly cash flow against total interest
Unsecured lending territory where interest forms a large part of total payment
Pay down this debt first, shorten the term, or negotiate using a better credit profile
Microfinance, credit-card, or fintech lending rates; interest can approach the principal
Restructure or consolidate before the interest compounds the burden further
Common mistakes
- - Focusing only on the monthly payment without considering total interest cost
- - Ignoring the effect of a small rate difference over a long loan term
- - Not accounting for loan processing fees, insurance, or other charges
Practical tips
Practical tips
Compare total interest, not just the monthly payment, when evaluating offers - a smaller monthly figure can hide a much higher total cost
Ask lenders for their annual percentage rate including fees, so you compare apples to apples
A shorter term at a slightly higher monthly payment usually beats a longer term at a lower payment for total cost
Build the loan payment into your budget for the full term before signing, including a buffer for rate changes if the loan is floating
Check for foreclosure or prepayment charges, especially on personal and auto loans, before planning early repayment
Use this calculator side by side with the EMI Calculator to sanity-check offers from different lenders
When should you use it?
- - Comparing loan terms across multiple lenders before applying
- - Determining the maximum loan amount you can comfortably repay
- - Evaluating whether a shorter tenure with higher payments saves enough interest
- - Planning your monthly budget around a new loan obligation
Benefits
- - Provides a complete picture of loan cost including principal and interest
- - Enables side-by-side comparison of different loan scenarios
- - Helps identify the optimal balance between tenure and monthly payment
Step-by-step example
Determine the total amount you need to borrow. Get the annual interest rate from your lender. Choose a repayment term that balances affordable monthly payments with reasonable total interest. The calculator will show your monthly obligation, the full repayment amount, and the interest you will pay over the life of the loan.
Real-world example
Borrowing Rs 5,00,000 at 8% annual interest for 5 years gives a monthly payment of Rs 10,138. The total payment over 5 years is Rs 6,08,281, of which Rs 1,08,281 is total interest. Understanding these figures helps you decide whether the loan is affordable and worth the interest cost.