Business loan EMI calculator
Business loan EMI calculator
The instalment on a working-capital or term loan, the interest across the whole term and the year-by-year schedule behind both.
How this is calculated
EMI = P x r x (1 + r)^n / ((1 + r)^n - 1), with r the annual rate over twelve and n the number of months. Each month's interest is the outstanding principal times r; what is left of the instalment repays the loan.
- Processing fees, insurance, a moratorium and a step-up or balloon structure all sit outside this figure. The sanction sheet is the document that fixes what you will actually pay.
- The yearly table is built by running the same reducing-balance arithmetic month by month, so it follows the instalment above rather than a lender's statement. Each year row is rounded on its own and can sit a paisa away from the interest line.
The instalment on a business loan, the interest it costs over the term and the year-by-year schedule that shows where the money goes.
Reducing balance, and the quote that is not
A loan on a reducing-balance rate charges interest on what you still owe, so the instalment stays level while the interest share of it falls each month and the principal share rises. The schedule printed below is that process run month by month and grouped by year, which is why the early years are mostly interest and the last is almost all principal.
An advertisement that quotes a flat rate charges interest on the original amount for the whole term, whatever you have repaid. The same number under that method costs considerably more, and the only reliable comparison is to read the total interest line rather than the rate.
Worked through
₹5,00,000 at 12 per cent over twenty-four months is an instalment of ₹23,536.74, ₹5,64,881.67 repaid in total and ₹64,881.67 of it interest. The instalment is rounded to paisa for the line you read; the total is the unrounded instalment multiplied by twenty-four, which is why twenty-four payments of the printed figure come to nine paisa more than the total line.
Extend the same ₹5,00,000 to three years and the instalment falls to ₹16,607.15 while the interest rises to ₹97,857.58 — a monthly figure ₹6,929.59 easier and a total ₹32,975.91 dearer. That trade is the one usually sold as affordability.
Questions readers ask
Does this match my sanction letter?
It matches the arithmetic, not the offer. A processing fee financed into the principal, bundled insurance, a moratorium on the first instalments or a balloon repayment will all move the lender’s figures away from these.
What is a moratorium doing to the schedule?
Nothing here, because a moratorium is a term of the sanction and not a formula. Interest during a payment holiday is either capitalised onto the principal or billed separately, and both change the instalment afterwards.
Can I prepay to cut the interest?
On a reducing-balance loan, yes: every rupee paid against principal removes the interest that rupee would have earned for the rest of the term. Check the prepayment charge and the lock-in period before treating that as free.
Why do the year rows not add exactly to the interest line?
Each year row is rounded on its own, while the interest line above is the rounded total of the unrounded months, so the two can sit a paisa apart. Nothing is forced to land on zero: the table runs the same arithmetic the headline uses, one month at a time.
More in Business, GST and accounts
Business, GST and accounts
Tax on a price, margin on a sale, interest on a loan, the documents a sale needs, a valuation and the point a business stops losing money.
- GST calculator Tax on a price before tax, the invoice total it produces and the CGST and SGST halves a within-state sale is billed in.
- GST inclusive value calculator Take a tax-inclusive price apart: the value of the supply, the tax inside it and the two halves that appear on the invoice.
- Profit margin and markup calculator The rupee profit on a sale, the margin measured against the selling price and the markup measured against cost.
- Discount and sale price calculator The price after one discount or two in a row, what comes off, and the single percentage the two together really are.
- GST invoice generator Line items, one tax rate and the totals — built into a clean invoice you can print or save as a PDF from your own browser.
- Break-even calculator How many units have to be sold before the business stops losing money, and what that turnover is in rupees.
- Business loan EMI calculator The instalment on a working-capital or term loan, the interest across the whole term and the year-by-year schedule behind both.
- Net profit calculator Gross, operating and net profit from four lines of a trading account, with the margin each one is worth.
- TDS calculator Tax deducted at source on a payment, what reaches the payee afterwards, and whether the amount clears the threshold you entered.
- Quotation generator Line items, tax and a validity date built into a printable quotation that says on its face that it is not a tax invoice.
- Receipt generator A payment received written into a printable receipt, with the amount in words and the reference that ties it to the transaction.
- Business valuation calculator Three bases of value — a profit multiple, a revenue multiple and net assets — printed side by side as arithmetic on the figures you supply, not as an opinion on what the business is worth.
- Freelance project cost calculator Hours, rate, direct expenses, a buffer for revisions and GST brought into one quoted total, with the effective hourly rate it leaves you.
Finance and debt
Interest on a deposit, the instalment on a loan, what a part payment saves and how long a card balance takes to clear.
Everyday utility tools
Electricity and water bills, how long a journey takes, kitchen measures and the percentage question that has two answers.