Month-by-month schedule
| Month | Opening balance | Interest | Principal paid | Total payment | Closing balance |
|---|
How the calculation works
The calculator splits your tenure into two phases:
- Interest-only phase (first N months) — you pay just the monthly interest on the full principal:
P × r. Principal stays atP; no amortisation happens. - EMI phase (the remaining months) — full EMI kicks in:
EMI = P × r × (1+r)ⁿ / ((1+r)ⁿ − 1), wherenis the number of post-IO months. Each EMI payment splits into interest on the current balance plus principal repayment, so the principal starts amortising only at this point.
The total interest paid is higher than a same-tenure plain-EMI loan because the principal isn't reducing during the IO window — that's the trade-off for the lower early-month outflow.
FAQ
Are processing fees common on overdraft loans?
Yes, typically 0.5–2% of the sanctioned limit. Add it to the fee field; it's reflected in the effective annual cost figure.
How is interest-only different from interest-free?
Interest-only means you still pay interest, but only interest — your monthly outflow covers the financing cost while the principal stays put. Interest-free would mean zero charges; that's an introductory promo on some products, not the norm. This calculator models the interest-only scenario.
Why use an interest-only period?
Cash-flow management. If you've drawn the loan for a project that won't generate revenue for the first few months, paying just interest keeps the early outflow small. The total interest paid over the loan is higher than a same-tenure EMI loan because the principal isn't reducing during those months — that's the trade-off.