How is a fixed-rate loan payment calculated?
A standard amortizing loan is repaid in equal monthly installments, each covering that month's interest plus part of the balance. The calculator takes your annual interest rate, divides it by 12 to get a monthly rate (r), and multiplies the term in years by 12 to get the number of payments (n).
The monthly payment is then P x r x (1 + r)^n / ((1 + r)^n - 1), where P is the amount borrowed. If the rate is exactly zero, the tool simply divides the loan amount by the number of months.
Total paid is the monthly payment times n, and total interest is total paid minus the amount borrowed. Early payments are mostly interest, and the share going to principal grows as the balance falls.
When a loan estimate is worth running
Running the numbers before you borrow shows what a given rate and term really cost. A longer term lowers the monthly payment but raises the total interest, and seeing both figures side by side makes that trade visible.
It is useful for comparing two offers, deciding how large a loan you can comfortably carry, or checking a lender's quoted installment. The EMI calculator uses the same formula and simply labels the first field Principal, so use whichever name you are used to.
Treat the output as an estimate for planning, not financial advice or a quote from a lender.
How to use the loan calculator
- Enter the Loan amount in the first box.
- Enter the Interest rate as a yearly percentage, such as 6 for 6%.
- Enter the Term in years. For a shorter loan, use a decimal (for example 1.5).
- Read the three results: Monthly payment, Total interest and Total paid. They update as you type.
Worked example: borrow 10,000 at 6% per year for 2 years. The monthly rate is 0.005 and there are 24 payments. The formula gives a monthly payment of about 443.21, total paid of about 10,636.95, and total interest of about 636.95.
Amounts are shown with a dollar sign, but the math is currency-neutral, so you can read them in your own currency.
What this estimate leaves out
The calculator assumes a fixed rate, equal monthly payments and no extra repayments. It does not include origination fees, taxes, insurance, late charges or variable-rate changes, so a real lender's figures can differ.
Interest is calculated monthly. Lenders that compound or accrue interest differently, or that round payments, may land a few cents or more away from this estimate.
Also remember that the term field is in years only. Convert months to years before entering them, and use the percentage calculator if you need to express a fee as a share of the loan.