What a loan really costs, in words and numbers.
A loan's cost is its interest over the term. How the Loan calculator works it out, rounds it like a ledger and says it in words first.
By Suraj Kumar3 min read
The payment is the number on the offer; the cost is what all the payments add up to. Here is how both are worked out.
The payment.
Every month the same amount is paid; part is interest on what is still owed and the rest pays the loan down. The payment is the one that pays it off exactly in the term: on ₹10 lakh at 8.5% over 20 years that is ₹8,678.23 a month.
The cost, in words.
Over those 20 years interest adds about ₹10.8 lakh, about the same as 125 of the payments. The page says this first, then draws each year's split between the loan and interest.
Rounded like a ledger.
Each month's interest is rounded to the cent or paisa, half up, and the last payment pays what is left, so the payments add up exactly. A lender's own schedule may differ by a few cents in the last payment.
Further reading
Topics: loan calculator · loan cost · total interest · loan payment calculator · interest calculator
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