A loan calculator answers the three questions every borrower has before signing: how much will I pay each month, how much will the loan cost in total, and how much of that total is pure interest. Enter the amount you want to borrow, the annual interest rate the lender quoted, and the repayment period in years — the calculator does the rest instantly.
यह कैसे काम करता है
The calculator uses the standard amortization formula used by banks worldwide. It converts the annual rate to a monthly rate, spreads repayment over the total number of monthly installments, and produces a fixed monthly payment where early payments are mostly interest and later payments are mostly principal.
सूत्र
M is the monthly payment, P is the loan amount, i is the monthly interest rate (annual rate ÷ 12 ÷ 100), and n is the total number of monthly payments (years × 12).
हल किया उदाहरण
Borrowing 50,000 at 6% annual interest over 5 years: the monthly rate is 0.5% and n is 60 payments. The formula gives a monthly payment of about 966.64. Over the full term you repay roughly 57,998 — meaning the loan costs you about 7,998 in interest on top of the 50,000 you borrowed.
सामान्य प्रश्न
Does a shorter term always save money?
Yes — a shorter term means fewer months accruing interest, so total interest drops significantly. The trade-off is a higher monthly payment, so choose the shortest term whose payment still fits your budget comfortably.
What is the difference between interest rate and APR?
The interest rate covers only the cost of borrowing the principal. APR (annual percentage rate) also folds in fees such as origination or administration charges, so it is usually slightly higher and is the better number for comparing offers.
Why does my bank's quote differ from this result?
Many banks advertise a flat rate, where interest is charged on the full original amount every year — a 2% flat rate over 5 years means 10% total interest regardless of repayments. The standard reducing-balance method charges interest only on what you still owe, so the same nominal rate costs roughly half as much. Use the method selector above to match your bank's quote; a 2% flat rate is equivalent to about 3.9% reducing.
Can I use this calculator for car loans or personal loans?
Yes. Any fixed-rate loan repaid in equal monthly installments — car loans, personal loans, student loans — follows the same amortization formula.