Quarterly Installment
Total Interest Payable
Total Amount Payable
Principal vs Interest
Quarterly Amortization Schedule
| Quarter # | Year | Principal Paid | Interest Paid | Closing Balance |
|---|
What is a Quarterly Loan Installment?
While standard EMIs are paid monthly, a quarterly installment is paid once every 3 months. This means you make exactly 4 payments in a year.
How Does Quarterly Interest Accrue?
In this method, the effective interest rate for each period is the Annual Rate divided by 4. The total number of installments is the Loan Tenure in Years multiplied by 4. Because interest compounds quarterly rather than monthly, the overall interest paid over the life of the loan differs slightly from a monthly EMI loan.
When are Quarterly Repayments Used?
- Corporate Loans: Many business term loans are structured with quarterly repayments to align with quarterly financial reporting and corporate cash flow cycles.
- Project Finance: Large infrastructure projects often use quarterly repayment schedules.
Frequently Asked Questions
Is paying quarterly cheaper than paying monthly?
No, usually paying monthly is slightly cheaper in terms of total interest outgo. When you pay monthly, you reduce the principal amount 12 times a year, meaning interest is calculated on a lower base. When you pay quarterly, the principal remains higher for 3 months at a time, leading to marginally higher interest accumulation.
How is the exact formula applied?
We use the standard EMI compounding formula: E = P * r * (1+r)^n / ((1+r)^n - 1). Here,
r is (Annual Rate / 4) / 100, and n is (Years * 4).