Loan EMI & Full Amortization Schedule
Computes exact monthly installments, effective APR including bank processing fees, and full month-by-month diminishing balance schedules to the paisa.
Diminishing Amortization Schedule
Principal vs interest decomposition month by month.
| Year | Beginning Balance | Installment | Principal Paid | Interest Paid | Ending Balance |
|---|---|---|---|---|---|
| Year 1 | ₹5,00,000 | ₹1,31,952 | ₹78,504 | ₹53,448 | ₹4,21,496 |
| Year 2 | ₹4,21,496 | ₹1,31,952 | ₹88,024 | ₹43,928 | ₹3,33,472 |
| Year 3 | ₹3,33,472 | ₹1,31,952 | ₹98,697 | ₹33,255 | ₹2,34,775 |
| Year 4 | ₹2,34,775 | ₹1,31,952 | ₹1,10,665 | ₹21,287 | ₹1,24,109 |
| Year 5 | ₹1,24,109 | ₹1,31,977 | ₹1,24,109 | ₹7,867 | ₹0 |
How Reducing Balance EMI & Effective APR Are Computed
Institutional lenders across India compute loan installments using the standard diminishing balance formula: EMI = P · r · (1+r)ⁿ / ((1+r)ⁿ − 1), where P represents facility principal, r is the monthly interest rate (annual percentage ÷ 1200), and n is the loan duration in months. At each compounding interval, interest is accrued exclusively on the remaining principal balance, ensuring that every subsequent repayment allocates an increasingly larger proportion toward debt retirement.
Unlike flat-rate representations that deceptively calculate interest on the full initial principal over the entire loan horizon, reducing-balance math guarantees mathematical fairness. Furthermore, our engine calculates the true Annual Percentage Rate (APR) by running internal rate of return (IRR) iterations on net disbursal after deduction of mandatory bank processing and administrative fees.
Frequently Asked Financial Questions
In a reducing-balance loan, interest is calculated solely on the outstanding principal balance at the end of each month. As you repay, the interest burden drops steadily. In contrast, flat-rate loans calculate interest on the full original principal throughout the entire tenure, effectively doubling the real interest rate.
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