The loan payment formula
E = P · r · (1+r)n ÷ ((1+r)n − 1)Where P is the amount borrowed, r is the monthly interest rate (annual rate ÷ 100 ÷ 12) and n is the number of monthly payments. Lenders call the fixed monthly payment the EMI (Equated Monthly Instalment) in many countries — it is the same calculation.
Worked example
Borrow $25,000 at 6.5% for 5 years: the monthly payment is $489, total interest is about $4,348, and the loan costs $29,348 in total. Add just $100 extra per month and the loan clears roughly 11 months early and saves about $770 in interest — try it above and watch the payoff month move.
What this calculator does not include
Origination fees, late fees, insurance bundled into some loans, and variable rates that change over time. Treat the result as an accurate educational estimate of principal and interest, not a lender's quote.
Frequently asked questions
What is the difference between EMI and a monthly payment?
None in the maths — EMI is simply the name used in India, Pakistan and much of Asia for the fixed monthly payment this calculator computes.
How do extra payments save interest?
Interest is charged on the remaining balance. Extra payments cut the balance faster, so every later month is charged less interest — the saving grows the earlier you start.
Why is so much of my first payment interest?
Because interest is calculated on the full starting balance. As the balance falls, the interest share shrinks and the principal share grows — the schedule above shows this shift.
Does a longer term always cost more?
Yes, for interest: a longer term lowers the monthly payment but you pay interest for more months, so total interest is higher.