This page is a free online loan calculator that not only helps you calculate monthly payments, total interest, and total repayment amounts for different repayment methods, but also allows you to quickly compare the overall costs and monthly payment pressures of different repayment options, helping you determine which repayment method is most cost-effective.
Understanding Different Repayment Methods
There are currently 3 main types of loan repayment methods, each with significant differences:
- Equal Monthly Installments (EMI): The monthly payment amount remains consistent. A portion goes toward interest, while another portion reduces the principal. The initial monthly payments are relatively lower compared to equal principal payments, but more of the early payments go toward interest rather than principal.
- Equal Principal Payments: The monthly payment amounts vary. The principal portion remains the same each month, while the interest portion decreases over time. Initial payments are higher than EMI, but they gradually decrease, reducing the payment pressure over time.
- Interest-Only Payments: Monthly payments remain the same, covering only the interest. The principal is paid in full at the end of the loan term.
For borrowers, these three methods produce very different results. Equal principal payments can quickly reduce payment pressure and minimize interest costs, but the initial payments can be challenging. More people choose equal monthly installments because the consistent payment amount creates less pressure, though the total interest paid is significantly higher. Interest-only payments are typically used for short-term loans to ease immediate financial pressure, and are generally not offered by banks for mortgages.
Taking a 1 million loan over 30 years with a 3.35% annual interest rate as an example, here's how the monthly payments differ across the three methods:
Total interest for each method:
- Equal Monthly Installments - Interest: 586,567.49 yuan
- Equal Principal Payments - Interest: 503,895.43 yuan
- Interest-Only Payments - Interest: 1,005,001.20 yuan
Unique Features of This Tool
Beyond calculating repayment methods, this page offers the following unique features:
- Three-Way Payment Method Comparison: Instantly view the total interest differences between equal monthly installments, equal principal payments, and interest-only payments;
- Flexible Parameter Adjustment: Freely set loan amount, interest rate, and term to see real-time results;
- Interest Rate Comparison Charts: Visualize how interest rate changes affect total interest, helping you choose the optimal loan timing;
- Detailed Repayment Schedule: View monthly payment breakdowns to understand principal and interest trends;
- One-Click Excel Export: Export detailed repayment schedules to Excel for easy saving and printing
We recommend using this tool to calculate the total interest differences between repayment methods before taking out a loan. This will help you avoid unnecessary interest expenses and make the most suitable loan decision based on your financial situation.