1. How EMIs combine Principal and Interest
EMIs pay down both principal and interest. Early in the loan term, payments mostly cover interest, while principal paydown increases over time. Our calculator displays this via amortization tables.
2. Reducing Balance Method
Most banks calculate interest monthly on the remaining principal balance. Making prepayments directly reduces the principal, saving interest costs over time.
2.1 Understanding Amortization Charts
Use amortization charts to view how each monthly payment is split between reducing the principal and paying interest.