Loan EMI Calculator

How the instalment is worked out

Banks work out a fixed monthly instalment (EMI — equated monthly instalment) with this formula, where P is the loan, r the monthly interest rate (the yearly rate ÷ 12 ÷ 100) and n the number of months:

EMI = P × r × (1 + r)n ÷ ((1 + r)n − 1)

Each instalment is the same, but what it pays for changes. Early on most of it is interest; towards the end almost all of it repays the loan. The table shows this year by year.

For example, Rs 10 lakh for 5 years at 18% a year costs about Rs 25,393 a month, and you pay about Rs 5.24 lakh in interest on top of the loan.

Questions

What is EMI?

EMI stands for equated monthly instalment — the same amount you pay every month until the loan and its interest are paid off. It is used for car loans, home loans, personal loans and buying on instalments.

Does this work for car financing and home loans in Pakistan?

Yes, for any loan with a fixed rate and equal monthly payments. Many bank loans in Pakistan are linked to KIBOR and change rate during the loan; the result here is the instalment at the rate you enter today. Banks may also add processing fees and insurance, which are not included.

How can I pay less interest?

Borrow less (a bigger down payment), take a shorter time, or get a lower rate. Try changing the time from 5 years to 3: the monthly amount goes up, but the total interest drops a lot.

What about Islamic financing?

Islamic banks use a rental or profit rate instead of interest, but the monthly payment for a fixed plan is usually worked out the same way. Enter the bank’s profit rate as the rate.

Is my information sent anywhere?

No. The sum is done on your phone and nothing is sent to us or to any bank.