Loan EMI Calculator

The Loan EMI Calculator shows exactly what a loan will cost you before you sign. Enter the loan amount, the annual interest rate and the tenure in years or months, and it returns your Equated Monthly Installment (EMI), the total interest you will pay over the life of the loan, the total amount repaid and a year-by-year amortization schedule showing how each year's payments split between principal and interest. It works for car financing, home loans and mortgages, personal loans and business loans in six currencies.

The calculator uses the standard reducing-balance formula that banks use: EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where P is the principal, r is the monthly interest rate (annual rate ÷ 12 ÷ 100) and n is the number of monthly installments. Interest is charged only on the balance still outstanding, so in the early months most of your EMI goes to interest, and towards the end most of it goes to principal. That is why paying a lump sum early in the loan saves far more interest than paying it near the end.

Worked example: a car loan of PKR 2,000,000 at 18% a year for 5 years (60 months) gives a monthly rate of 1.5% and an EMI of about PKR 50,787. Over 60 months you repay about PKR 3,047,211, which means roughly PKR 1,047,211 is interest. If the same 18% were quoted as a flat rate, interest would be charged on the full PKR 2,000,000 for all five years, giving PKR 1,800,000 of interest and an EMI of PKR 63,333 — the equivalent of a reducing rate of almost 29%.

How banks quote rates differs by country. In Pakistan, most car, home and business financing is variable and priced as KIBOR (the Karachi Interbank Offered Rate, usually the 6-month or 1-year tenor) plus a fixed spread, for example 6-month KIBOR + 3%. The rate resets at each repricing date, so your installment can rise or fall over the loan; enter the current KIBOR plus your spread to estimate today's EMI. Islamic banks offer the same products as Ijarah or Diminishing Musharakah, but their rental is usually also benchmarked to KIBOR. In the UAE and Saudi Arabia, home finance rates are often linked to EIBOR or SAIBOR after a fixed introductory period, while car and personal loans are frequently advertised on a flat rate.

A flat rate always looks cheaper than it really is, because interest is charged on the original amount even after you have repaid most of it. As a rough rule, a flat rate is equivalent to a reducing-balance rate of nearly double for typical 3 to 5 year loans. UAE banks are required to disclose the reducing (annual percentage) rate alongside any flat rate, so always compare reducing rates across lenders. This tool shows the flat-rate EMI and its reducing-balance equivalent next to your result so you can see the gap at a glance.