How to calculate loan repayment cost
Published on : May 16, 2023

Loan repayment cost refers to the total amount of money you’ll have to pay back when you borrow money from a lender. This includes the amount you borrowed plus any additional fees and interest charges. Understanding the total cost of a loan is essential for managing your finances and making informed decisions about borrowing money. The cost of loan repayment can vary depending on several factors, such as the interest rate, loan term, and amount borrowed. 
Here we will explore what loan repayment cost is and how to calculate it using a Personal Loan Repayment Calculator.

What Is Loan Repayment

Loan repayments refer to the regular payments made by a borrower to a lender in order to repay a loan. The loan repayment amount typically includes both the principal amount borrowed and the interest charged by the lender. The repayment schedule is usually outlined in the loan agreement, and the borrower is required to make payments on a regular basis until the loan is fully repaid. The loan repayment amount is determined by several factors, including the loan amount, interest rate, loan term, and any additional fees or charges. Failure to make loan repayments can result in default and negatively impact the borrower’s credit score, making it difficult to obtain credit in the future.

How Personal Loan Repayment Works

Personal loan repayment works by paying back the amount you borrowed from a lender, along with any interest and fees, over a set period. The repayment process typically involves making regular payments, such as monthly instalments, until the loan is fully repaid. Personal loans can have fixed or variable interest rates, which can impact the total amount you’ll need to repay. If you miss a payment or are late with a payment, it can negatively impact your credit score and may result in additional fees. It’s essential to understand the terms and conditions of your personal loan and make timely payments to avoid any adverse effects on your credit and financial well-being.

How to Calculate Loan Repayment Costs

Below is a formula for calculating loan repayment costs.

  1. Loan Amount
  2. Interest Rate
  3. Loan Term (in months)

Formula: M=P [i (1+i) ^n] / [ (1+i) ^n-1]


M= Monthly payment 

P= Loan Amount

I = monthly interest rate (interest rate divided by 12)

n = Loan term in months

For example, if you have taken an interest loan of INR 1,00,000 with an interest rate of 12% for a term of 24 months, the calculation would be 

i = 0.12 /12 = 0.01

n= 24

M= 1,00,000 [0.01 (1+0.01)^24] / [(1+0.01)^ 24-1]

M= INR 43,3754
You can use the LoanTap EMI calculator to easily calculate your loan repayment cost. Make sure that the values are entered in the appropriate fields. The online personal loan repayment calculator will do the difficult calculations for you, but understanding how arithmetic works over the loan period can help you make better purchase judgement.


Calculating loan repayment costs involves considering the loan amount, interest rate, loan term, and any additional fees or charges. By using a personal loan repayment calculator or formula, borrowers can determine their monthly payments and the total amount of interest they will pay over the life of the loan. It is important for borrowers to carefully review their loan agreement and understand all terms and conditions before agreeing to the loan, to ensure they can afford the repayment costs and avoid defaulting on the loan.