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How To Calculate Loan Repayment Cost On Your Own?

Published on Mar 10, 2023Updated on May 21, 2024

How To Calculate Loan Repayment Cost On Your Own?

Loan repayment is an important financial factor that has an impact on an individual's finances. To manage your budget and avoid loan default, you must have an exact estimation of the loan repayment cost. In this article, we will go over how to calculate the repayment of loan costs on your own.

By the end of this article, you will have a better grasp of how to calculate repayment of loan and will be more confident in making financial decisions.

Understanding Loan Repayments

Personal loans are unsecured loans that can be used for a variety of purposes, including debt consolidation, home improvement, and unexpected expenses. Following are the factors that impact the cost of loan repayments:

Loan Amount: When your loan is accepted, you will get a lump sum of money, and you will return the loan over time in regular installments that include both principal and interest. For a personal loan, many NBFCs give you loan amounts between INR 50,000 and INR 25,00,000.

Repayment Period: The repayment period is the length of time it takes to pay back the loan in full. It is usually between 12 to 60 months.

Interest Rate: The cost of borrowing money is represented by the interest rate on a personal loan. It is represented as an annual percentage rate (APR) and might be fixed or variable. The best personal loan interest rates are from about 12% to 36%.

Payment Amount: The total amount you will pay each month, including principal and interest, is your payment amount. The loan amount, interest rate, and repayment period are used to calculate the amount.

Calculating Loan Repayment Costs

The easy loan payment calculator considers your loan principal, interest rate, and loan duration. The loan calculator you will need to use to calculate your payments is determined by the type of loan you have. There are interest-only loans and loans that include both principal and interest (amortising loans).

Interest-Only Loans:

An interest-only loan is one that requires just interest payments for a set period of time. Your monthly payments are more affordable than they would be with a regular, amortised loan because the amount due remains constant during this period. The principal is repaid in monthly installments. By reducing the principal element of the payment, interest-only mortgages reduce the required monthly payment. To figure out interest-only loan installments, multiply the loan amount by the annual interest rate and divide by the number of payments each year.

Must Read: 6 Factors that Affect Your Personal Loan Interest Rates

Amortised Loans:

Amortising loans are those in which the borrower repays the loan amount plus interest over the life of the loan in equal monthly installments. With an amortising loan, each payment reduces the loan total until the loan is fully paid off at the end of the loan term. Amortising loans are widespread for mortgages, student loans, and car loans, and they are a desirable alternative for borrowers who desire predictable monthly payments and the guarantee that their loan will be paid off in full at the end of the term. A loan amortisation calculator can help you understand the entire cost of a loan, plan a budget, and compare several loan options to find the best one for your needs.

Formula For Calculating Loan Repayment Costs 

To calculate personal loan repayment costs, know the following information:

1. Loan amount
2. Interest rate
3. Loan term (in months)

Then use the formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]


M = monthly payment
P = loan amount
i = monthly interest rate (interest rate divided by 12)
n = loan term in months

For example: If you take a personal loan of INR 1,00,000 with an interest rate of 12% for a term of 24 months, the calculation would be:

i = 0.12 / 12 = 0.01
n = 24

M = 1,00,000 [ 0.01(1 + 0.01)^24 ] / [ (1 + 0.01)^24 – 1 ]

M = INR 43,574 (rounded to nearest whole number)

Moreover, you can use a loan EMI calculator to easily determine your loan repayment costs. Simply ensure that the appropriate values are entered in the appropriate fields. The online SMFG India Credit Personal Loan EMI Calculator will do the difficult calculations for you, but understanding how the arithmetic works over the loan period can help you make better purchase judgments.

Must Read: 6 Reasons Why You Need a Personal Loan for Your Child’s Higher Education


Finally, determining the affordability and viability of borrowing money requires calculating personal loan repayment costs. Using the above-mentioned formula, you can quickly calculate your monthly payments and total loan repayment costs. This information can assist you in making informed judgements regarding the amount of money you wish to borrow and the terms you are willing to accept.

SMFG India Credit offers 100% online application on personal loans with a maximum amount of up to INR 25 lakhs* at affordable rates and flexible payback terms. Enjoy minimal processing fees and time with no hidden charges. Moreover, funds will be transferred to your account within 30 minutes* of loan approval. Check your personal loan eligibility through our online calculator. Visit our website and apply for a personal loan online, now!

* Please note that this article is for your knowledge only. Loans are disbursed at the sole discretion of SMFG India Credit. Final approval, loan terms, disbursal process, foreclosure charges and foreclosure process will be subject to SMFG India Credit's policy at the time of loan application. If you wish to know more about our products and services, please contact us

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