The Secret Math Behind Your Loan
Most people rely on online calculators without understanding the math. But knowing the formula gives you power during negotiation.
The Standard Amortization Formula
Whether you are in the USA, UK, or India, banks use this universal formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
- M: Total monthly payment
- P: Principal loan amount
- i: Monthly interest rate (Annual Rate / 12)
- n: Number of months (Years * 12)
Why Early Payments Matter?
Did you know that paying just one extra EMI per year can reduce a 30-year mortgage to 24 years? This is because prepayments go directly towards the Principal, bypassing the Interest trap.
Conclusion
Use our Global Loan Calculator to simulate these prepayments and see how much you can save.