Calculate simple and compound loan interest quickly.
The Loan Interest Calculator computes the monthly EMI (Equated Monthly Instalment), total amount repaid, and total interest charged over the life of an amortizing loan. The EMI formula is EMI = P × r × (1+r)^n / ((1+r)^n − 1) where P is the principal, r is the monthly interest rate (annual rate ÷ 12 ÷ 100), and n is the number of monthly payments. Each payment covers that month's interest (on the remaining balance) plus a portion of principal — so early payments are mostly interest, while late payments are mostly principal.
Amortization means each fixed payment covers the interest accrued that month plus reduces the principal. Because the principal decreases, the interest portion shrinks each month and the principal portion grows — even though the EMI amount stays constant.
Yes — significantly. Even $100/month extra on a 20-year mortgage at 7% saves approximately $23,000 in total interest and cuts the loan by 2.5 years.
Flat rate calculates interest on the original principal throughout the loan. Reducing balance calculates interest on the remaining balance. A 7% flat rate is equivalent to roughly 12–13% on a reducing balance basis for a 3-year loan.