The monthly payment and the full journey
For the same principal and constant positive interest rate, spreading repayment over more months generally reduces each EMI. Because the principal remains outstanding for longer, the total interest in that model increases. A shorter tenure does the reverse, with higher monthly payments and lower total interest.
A worked illustration
For ₹10,00,000 at an illustrative 10.5% annual rate, the standard monthly reducing-balance calculation gives an EMI of about ₹21,494 over five years and ₹16,861 over seven years. Total interest is approximately ₹2.90 lakh and ₹4.16 lakh respectively. These rounded examples exclude fees and are not available loan offers.
Try your own comparison
- Keep the amount and interest rate unchanged.
- Compare two repayment periods in the EMI calculator.
- Note both the EMI and total interest.
- Consider whether the higher monthly payment would leave a sufficient buffer.
- Review the lender’s actual repayment schedule and other charges.
Do not plan around assumptions
Do not rely on a future bonus, promotion or uncertain business income to make the repayment affordable. If you expect to prepay, first understand the lender’s rules and applicable charges. A variable rate can also change the eventual result.