How amortization turns one payment into interest and principal
Every fixed loan on this hub — the Loan Calculator, the Mortgage Calculator and the Car Loan Calculator —
runs on the same amortization formula: EMI = P · i · (1+i)ⁿ ÷ ((1+i)ⁿ − 1), where P is the amount borrowed, i is the monthly rate (annual rate ÷ 12) and n is the number of months.
The result is one fixed payment that clears the balance to zero by the end of the term. Inside each payment, the split shifts over time.
Early on, most of the money covers the interest accrued on a large outstanding balance, so principal barely moves; near the end, the balance is small, interest is tiny, and almost the whole payment retires principal.
That is why total interest, not the headline rate, is the true cost of borrowing. Stretching a loan over more years lowers the monthly figure but adds interest, because you hold the lender's money longer.
Compounding, contributions, and the borrowing-versus-investing trade-off
Saving runs the same engine in reverse. The Compound Interest Calculator uses A = P(1 + r/m)^(mt), so interest earns interest and the balance curve bends upward — the final years add far more than the early ones.
Add a regular deposit and each contribution starts its own compounding journey, which is exactly how the SIP Calculator and Savings Goal Calculator build wealth: steady monthly amounts plus growth over a long horizon.
This is also the heart of every borrow-versus-invest decision.
A loan compounds against you at its interest rate while an investment compounds for you at its expected return, so paying down 20% card debt is a guaranteed 20% return that a volatile market rarely beats.
When a loan's rate is low and fixed, investing the difference can win — but only over enough time for compounding to outrun the certain cost of the debt.
How the tools connect, and the formulas behind them
These calculators are designed to be used together. Size a purchase with the Mortgage Calculator or Loan Calculator, then check whether the same monthly amount would grow faster in the Compound Interest Calculator or SIP Calculator.
Set a target date in the Savings Goal Calculator to learn the exact monthly contribution needed, and revisit it whenever your balance changes.
Each tool uses standard financial formulas — reducing-balance amortization for loans, the compound-interest and future-value-of-an-annuity formulas for savings — applied to the figures you enter. The results are planning estimates, not financial advice.
Real interest rates, lender fees, expense ratios, inflation and tax treatment vary by bank, product and country, and markets do not move in a straight line.
Confirm exact numbers and terms with your lender or a qualified financial adviser before committing.