Fixed Principal Loan Calculator

A Fixed Principal Loan (also called flat rate or equal principal loan) is a repayment structure where the principal repayment remains constant throughout the loan tenure, while the interest is calculated on the reducing balance. This results in higher payments initially that decrease over time as the outstanding principal reduces.

This structure is different from the standard EMI model where the total payment (principal + interest) remains constant. Fixed principal loans are common in business loans and certain agricultural credit facilities in India.

• Payment Pattern: Fixed principal loans have decreasing monthly payments; EMI loans have constant payments
• Total Interest: Fixed principal loans typically result in lower total interest paid compared to EMI loans
• Initial Burden: Monthly payments are higher in the beginning but reduce over time
• Cash Flow: Suits borrowers who expect stable or decreasing expenses over time

Each monthly payment is calculated as:

Monthly Payment = (P / n) + (Outstanding Balance × r / 12)

• P / n = Fixed principal component each month
• Outstanding Balance = Remaining loan amount, decreasing each month
• r = Annual interest rate

The first month's payment is the highest, and each subsequent month the interest component decreases.

• Step 1: Enter the total loan amount
• Step 2: Input the annual interest rate
• Step 3: Set the loan tenure in months or years
• Step 4: View the month-by-month repayment schedule showing decreasing payments