How loan payments work

A standard installment loan splits repayment into equal monthly amounts. Each payment covers some interest and some principal. Early in the term, more of the payment is interest. Later, more of it reduces what you still owe.

The three inputs

Principal is the amount borrowed. The annual rate is the cost of that money. The term is how many months you will pay. Stretching the term lowers the monthly figure and usually raises the total interest.

DEVTOOLIO uses the common amortization formula so you can estimate EMI before you talk to a lender. Try the Loan Calculator. The number is an illustration, not an offer.