Amortization Calculator - Understand Your Loan Payments (2024)
Key Insight: In a ₹20 lakh home loan at 8.5% for 20 years, you'll pay ₹17,500 EMI but ₹22 lakhs in interest - more than the principal amount!
What is Loan Amortization?
Amortization is the process of spreading loan payments over time through regular installments. Each payment covers both interest charges and principal repayment.
How Amortization Works
Early Payments
Higher interest component (70-80% of EMI goes toward interest)
Later Payments
Higher principal component (70-80% of EMI reduces principal)
Amortization Formula
EMI = [P × r × (1+r)^n] / [(1+r)^n-1]
Where:
P = Principal loan amount
r = Monthly interest rate (annual rate/12/100)
n = Total number of payments (loan term in months)