Loan Calculator
What is a Loan Calculator?
A Loan Calculator helps you understand the full cost of borrowing money before you sign any agreement. By entering your principal amount, annual interest rate, and the number of years you plan to repay, it instantly shows your fixed monthly payment, total amount you will pay over the loan's life, and the total interest charged by the lender.
This information is critical when comparing loan offers from different banks or lenders — a small difference in interest rate can mean thousands saved or lost over a multi-year loan.
How Does the Loan Calculator Work?
The calculator uses the standard amortisation formula for fixed-rate loans:
Where:
P = Principal loan amount
r = Monthly interest rate (annual rate ÷ 12 ÷ 100)
n = Total number of monthly payments (years × 12)
From the monthly payment, the total amount payable and total interest are derived: Total Payment = Monthly Payment × n and Total Interest = Total Payment − Principal.
Example Calculation
Annual Interest Rate: 9%
Loan Term: 5 years (60 months)
Monthly Rate (r): 9 / 12 / 100 = 0.0075
Monthly Payment: ≈ ₹10,378
Total Payment: ₹10,378 × 60 = ₹6,22,680
Total Interest: ₹6,22,680 − ₹5,00,000 = ₹1,22,680
Why Use a Loan Calculator?
- Compare offers — See how two loans with different rates or terms compare in total cost.
- Budget planning — Know your exact monthly obligation before committing to a loan.
- Interest awareness — Understand how much extra you pay beyond the borrowed amount.
- Prepayment decisions — Visualise how a shorter term reduces total interest.
- Negotiation — Walk into a bank knowing exactly what terms you should aim for.