We generally buy an asset on loan. In order to repay the loan, we have to pay Equated Monthly Instalment (EMI). Every EMI payment contains a principal component and interest component. Let us look at the amortization of a loan. For initial calculation, we will keep the loan amount as 1,00,00,000; interest rate of 7.5% and tenure of 20 years with monthly payments.
Loan EMI & Amortization Calculator
Amortization Schedule
For loan amount 1,00,00,000; interest rate of 7.5% and tenure of 20 years with monthly payments, the EMI comes out to be 80559. In the very first payment, the interest component is 62500 and principal component is of 18059. The interest component is 77.58% of the total payment of the first payment.In every subsequent payment, the interest component % (of the total payment) goes down and the principal component % (of the total payment) goes up. If we look at installment number 130, it is the first time the principal component is higher than the interest component. This means for the first 129 months (10 years and 9 months), majority of the monthly payment goes towards the interest payment. This will change if the amount, interest rate, tenure and frequency of payment changes. To get your specific EMI, you can change amount, interest rate, tenure and frequency of payment (in which case it will not be technically Equated Monthly Installments but it will be equated installments) .