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Loan EMI Calculator
Work out your monthly installment, the total interest you'll pay, and how the balance falls year by year.
Amortisation
How the balance falls, year by year
| Period | Principal repaid | Interest paid | Balance left |
|---|
Enter your loan details above to build the schedule.
Reading the result
Early installments are mostly profit, not principal
The instalment stays level, but its composition does not. In the first years most of each payment covers the profit or interest charge and only a little reduces the balance. That reverses slowly, and near the end almost all of it is principal.
Two practical consequences. Paying off a loan three years into a long term leaves a balance far higher than "three years of payments" suggests. And a small extra payment made early removes far more total cost than the same payment made late, because it stops profit accruing on that amount for the whole remaining term.
The advertised rate is not the whole cost
Processing fees, documentation charges, mandatory insurance and early-settlement penalties sit outside the instalment and outside this calculation. Two offers at the same headline rate can differ meaningfully once those are counted, which is why the total-cost figure on the sanction letter is the one to compare.
Fixed and floating behave differently
Where the rate is linked to a benchmark such as KIBOR, the instalment is not fixed for the life of the loan. It is recalculated as the benchmark moves. A schedule produced at today's rate shows what happens if nothing changes, which over a long term it will.
Where this stops
This is the conventional amortisation calculation. An Islamic facility such as a diminishing musharakah or an ijara is structured differently, even where the monthly figure looks similar.
The Islamic vs conventional finance calculator compares the two.
FAQs
Loan EMI FAQs
How is the monthly installment calculated?
On the standard reducing-balance annuity formula: EMI = P × r × (1+r)^n ÷ ((1+r)^n − 1), where P is the amount financed, r is the monthly rate (annual rate ÷ 12) and n is the number of months. Every installment is the same size, but the split inside it shifts — early installments are mostly interest, later ones mostly principal.
Why does the schedule show so much interest in the early years?
Interest each month is charged on the outstanding balance, which is highest at the start. As the balance falls, the interest portion of the fixed installment shrinks and the principal portion grows. That is why paying extra early reduces total cost far more than paying extra late.
What rate should I enter?
Use the rate your bank quotes for the facility — in Pakistan most consumer financing is priced at KIBOR plus a bank spread, and is often floating rather than fixed. This calculator assumes the rate stays constant for the whole tenure, so on a floating facility treat the result as a snapshot at today's rate.
Does this include bank fees and insurance?
No — processing fees, documentation charges, tracker and insurance premiums are excluded, and on vehicle financing insurance is usually a significant annual cost. Ask for the full schedule of charges and add them to the total outlay shown above.
Can I use this for car, home and personal loans?
Yes — the annuity maths is the same for all three. What differs is the rate, tenure and the fees each product carries. For Islamic financing the structure differs (rent or a marked-up sale price rather than interest), though the installment profile often looks similar — see the Islamic vs Conventional Finance Calculator.
Related tools
Comparing Islamic financing?
See how an Islamic facility's cost compares with a conventional loan.
Open Islamic vs Conventional Calculator