Calculate monthly loan payments, total interest costs, and see exactly how extra principal payments slash your loan payoff tenure.
Bank loans and mortgages use the standard reducing balance formula to determine the Equal Monthly Installment (EMI):
Where P is the principal loan amount, r is the monthly interest rate (Annual Rate ÷ 12 ÷ 100), and n is the total number of monthly payments.
In the initial years of any long-term loan, more than 70% of each standard monthly installment pays interest rather than principal. Every extra dollar or rupee you apply directly to principal reduces the balance upon which future interest is calculated, triggering massive compound interest savings.
Standard monthly EMI: PKR 68,348
Total interest payable over 15 years: PKR 7,302,640 (more than the loan itself!)
By adding an extra PKR 15,000 / month:
Payoff time drops from 15 years down to 9.4 years (5.6 years saved)
Total interest saved: PKR 3,240,000+
Calculate Equated Monthly Installments (EMI) for home, car, or personal loans with a complete monthly breakdown table.
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Learn how extra monthly payments reduce your loan tenure and total interest. Complete reducing balance formula, worked numbers, and payoff strategies.
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