Questions about loans and EMIs

On a ₹50 lakh 20-year home loan at 8.5%, about 81% of your first year's instalments go to interest and only 19% reduces the principal. The crossover — where principal overtakes interest within a single EMI — does not arrive until month 143, in the twelfth year. This is precisely why prepaying early has such a large effect: the same ₹5 lakh saves roughly ₹14.6 lakh in interest if paid in month 24, but only about ₹4.2 lakh if paid in month 144. The year-by-year chart on this page shows the split for your own numbers.

Under the old tax regime, Section 24(b) allows a deduction on interest paid for a self-occupied property, and Section 80C covers principal repayment within the overall 80C limit. The new regime largely removes these benefits for self-occupied property. Limits and eligibility change with each Finance Act, so check the current year's rules or ask a tax professional — this calculator does not model tax relief.

The arithmetic comparison is your loan's interest rate against the return you would earn elsewhere, after tax and adjusted for risk. Prepaying gives a guaranteed, risk-free return equal to your loan rate; an investment offering more comes with the risk of delivering less. The right answer depends on your rate, tax position, job security and how you feel about carrying debt. This tool quantifies the loan side precisely; it cannot tell you what to do.

A car is a depreciating asset, so the lender's security loses value from the day you drive it away, while property generally does not. That extra risk shows up as a higher rate and a shorter maximum tenure — typically up to seven years for a new car and less for a used one.

Stretching a car loan lowers the EMI but raises total interest, and it increases the risk of negative equity — owing more than the car is worth, which becomes a problem if you sell or write it off early. Run both tenures in the calculator and compare the Total Cost of Loan figure before choosing the longer term.

Personal loans are unsecured — there is no asset backing them — so pricing is driven almost entirely by the lender's assessment of you: credit score, income stability, employer category and existing obligations. This is why the same borrower can see offers spanning a very wide band, and why comparing the total cost across several lenders is worth the effort.

Many lenders levy a fee on early closure of a fixed-rate personal loan, and some impose a lock-in period before any prepayment is allowed. These charges are not modelled by this calculator — check your loan agreement, then compare the fee against the interest saving the calculator shows to decide whether prepaying is worthwhile.

A term loan is a fixed amount repaid on a schedule of EMIs — that is what this calculator models. Working capital facilities such as cash credit or overdraft charge interest only on the amount actually drawn, with no fixed repayment schedule, so an EMI calculation does not apply to them.

Most education loans allow a moratorium covering the course duration plus six to twelve months, during which you make no EMI payments. Interest usually still accrues and is added to the principal, so the balance you begin repaying is larger than the amount disbursed. This calculator models the repayment phase — enter the post-moratorium balance as the loan amount for an accurate EMI.

A gold loan is secured against pledged jewellery, so approval is fast and credit history matters far less. Tenures are short — often 6 to 24 months — and some schemes are bullet-repayment (all interest and principal at the end) rather than EMI-based. Use this calculator for EMI-based gold loan schemes.