Compare two home loans, personal loans, or auto loan schemes side-by-side. Spot differences in monthly EMI, total interest paid, and cumulative payable outflow.
Plan A has a lower total interest payout.
| Metric | Plan A | Plan B | Difference |
|---|---|---|---|
| Loan Principal | — | — | — |
| Interest Rate (p.a.) | — | — | — |
| Loan Tenure | — | — | — |
| Monthly EMI | — | — | — |
| Total Interest Cost | — | — | — |
| Total Repayment Amount | — | — | — |
Most modern retail loans (Home, Personal, Auto) are calculated using the reducing balance method. With every monthly EMI payment, a portion goes toward reducing the principal amount.
This means subsequent interest compounding is calculated only on the remaining principal balance, resulting in smaller interest costs in later years.
A longer tenure drops your monthly EMI burden, which is beneficial for cash flow. However, it drags out the repayment period, resulting in a much higher cumulative interest expense.
When comparing loans, try to keep the tenure as short as comfortably possible for your budget. Minimizing the interest rate is critical: even a 0.25% drop saves massive sums over 20 years.
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Read our in-depth articles and guides related to this tool to help you make smarter decisions.
Most Indians accept an EMI figure from their bank without questioning it. This guide explains exactly how Indian banks calculate EMI — the reducing balance method, how RBI repo rate changes flow through to your loan, and what you can do to pay off your home loan years early.
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