Calculating Amortisation Schedule of your loans

Be it home loan, car loan or any other loans; they all have same style of calculation. These calculations are non-trivial and it becomes more complicated if you are going to make some prepayments.

To make it all too easy I have built an app to do all the hard work for you. You will get insight into how much interest money you are really paying on your “low interest” rate loans, and how a small repayment early can save you big money. Also it gives you visibility into exactly how much interest vs principal you are repaying on your each EMI.

If you are new to this then the last statement might not be very clear to you. Each month you pay a fixed amount as EMI (Equated Monthly Instalments), however, each of those EMIs pay off part of the principal amount (the loan amount you borrowed) and part of the overall interest amount. The interesting thing is that percentage principal and percentage interest amount you pay in each EMI is not fixed. Towards the start of loan period the interest part is more and the principal part is less, as the loan progresses their ratio gradually progressively approaches 1:1 near the mid of your loan tenure then it flips and your principal ratio becomes more than your interest. Eventually it is only principal which is left; at which point the loan is fully repaid.

That is why making lump sum prepayments towards end of loan tenure is not too beneficial as you are only repaying the principal which anyway you need to repay. Where you can save on, is the interest part. Always keep in mind the amount of interest you are paying is directly proportional to the amount you loaned and the time you are taking to return that amount.

Play with different values in the calculator below and notice the pattern in the graph.

One Comment

  1. […] From 15L point it pretty fixed. You need to claim more than 2.5L of deductions to get benefit from old slab. If you cannot then switch to new slab. Out of 2.5L 50k Standard deduction you get for free, so what is left is 2L deduction. For that you need to max out your 80C, and NPS or 80D. If you have a home loan then it would be easier because you can claim 2L per annum of interest amount you paid for home loans. However, loans typically have more interest component towards the start and more principal amount at the end. To see how much interest you are paying year wise see – […]


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