How loan payments are calculated
A loan is repaid in equal monthly instalments. Each payment covers the interest for that month plus a portion of the amount you borrowed (the principal). Early on, most of the payment is interest; later, more goes to principal. This calculator uses the standard EMI formula to find the fixed monthly amount.
How to lower your total interest
- Choose a shorter term where you can afford the higher monthly payment.
- Make extra payments they reduce the principal directly.
- Compare lenders; even a slightly lower rate saves a lot over time.
What counts as a good interest rate?
Rates depend on the loan type, your credit score and the lender. Secured loans (like a car or home loan) usually have lower rates than unsecured personal loans. Always check the APR, which includes fees, not just the headline rate.