Loan principal
Annual reducing balance rate
Repayment period in years
Monthly EMI
₹0
Total Interest
₹0
Total Payment
₹0
Year-wise Payment Schedule
| Year | Principal | Interest | Total Paid | Balance |
|---|
Understanding Your EMI Payment
Your monthly EMI payment has two components:
- Interest Component: The portion that goes to the bank as the cost of borrowing. This is higher in early months and decreases over time.
- Principal Component: The portion that reduces your outstanding loan balance. This is lower in early months and increases over time.
This pattern — where interest dominates early payments — is why prepaying in the first few years of a loan saves substantially more interest than prepaying later.
Frequently Asked Questions
Why does my EMI stay the same but the interest keeps changing?
Your EMI is fixed, but every month interest is recalculated on the reducing outstanding balance. As the balance drops, less interest is charged, so more of your fixed EMI goes toward principal. This is the reducing balance method.
Can my EMI change after it has started?
For floating rate loans, your EMI may change when the bank changes its MCLR/repo rate. Fixed rate EMIs do not change. If you make a part payment, you may choose to reduce EMI or reduce tenure.