Your EMI is one number. The schedule underneath it — how much of each year's payments actually clears the loan — is where every good prepayment decision starts.
| Year | Principal paid | Interest paid | Balance left |
|---|
Reducing-balance method, the standard for Indian bank loans. Figures are rounded to the rupee; your bank's schedule may differ by a few rupees on day-count conventions.
Every bank uses the same reducing-balance formula: EMI = P × r × (1+r)ⁿ ÷ ((1+r)ⁿ − 1), where P is the amount borrowed, r the monthly rate (annual rate ÷ 1200) and n the number of months. On ₹30,00,000 at 9% for 20 years that works out to ₹26,992 a month — and ₹34.8 lakh of interest over the life of the loan, more than the amount borrowed.
The EMI never changes, but what it buys changes every month. Interest is charged on the outstanding balance, so early on — when the balance is at its largest — most of the EMI goes to interest. On that ₹30L loan, the very first EMI carries about ₹22,500 of interest and clears just ₹4,492 of debt. By the final year the split has flipped.
Two decisions depend on the schedule, not the headline number:
It doesn't guess processing fees, insurance add-ons, or moratorium interest — those vary by lender and belong in your sanction letter, not a generic tool. And it won't tell you whether the loan is a good idea. It shows the arithmetic; the judgement stays yours.
Plan the payoff, not just the EMI — free, private, on your device →The Unowe planner builds an avalanche prepayment plan across all your loans, encrypted on your device — the numbers never reach a server.
More from Unowe: Prepay vs invest calculator · Old vs new tax regime (FY 2026-27) · Home loan prepayment guide · Avalanche vs snowball · Credit-card payoff calculator
Educational tool, not financial advice. Verify figures against your lender's sanction letter and repayment schedule. Privacy & Terms