Calculating your monthly payment (interest only) is straightforward once you know the Interest Only Loan formula and what each input means. This guide explains the method in plain language, walks through a manual calculation, and gives worked examples you can follow — then you can do it instantly with the Interest Only Loan Calculator.
What is Interest Only Loan?
The Interest Only Loan calculation tells you your monthly payment (interest only) from a few simple inputs. The figure you are solving for here is the monthly payment (interest only), expressed in INR.
The Interest Only Loan formula
The core formula is:
Monthly payment (interest only) = Loan amount × Annual interest rate ÷ 100 ÷ 12Here is what each input means:
- Loan amount — a money amount. Example: ₹20,00,000.
- Annual interest rate — a percentage, such as an annual rate. Example: 9%.
How to calculate it step by step
- Write down the loan amount (for example, ₹20,00,000).
- Write down the annual interest rate (for example, 9%).
- Apply the formula above to get your monthly payment (interest only).
- Double-check the result with the Interest Only Loan Calculator.
Worked examples
Example 1
| Input / Output | Value |
|---|---|
| Loan amount | ₹20,00,000 |
| Annual interest rate | 9% |
| Monthly payment (interest only) | ₹15,000 |
| Annual interest | ₹1,80,000 |
With loan amount of ₹20,00,000 and annual interest rate of 9%, the monthly payment (interest only) works out to ₹15,000.
Example 2
With loan amount of ₹40,00,000 and annual interest rate of 9%, the monthly payment (interest only) works out to ₹30,000.
| Result | Value |
|---|---|
| Monthly payment (interest only) | ₹30,000 |
| Annual interest | ₹3,60,000 |
Example 3
With loan amount of ₹10,00,000 and annual interest rate of 9%, the monthly payment (interest only) works out to ₹7,500.
| Result | Value |
|---|---|
| Monthly payment (interest only) | ₹7,500 |
| Annual interest | ₹90,000 |
Tips for an accurate result
- Keep your units consistent — mixing, say, months with years or grams with kilograms is the most common source of error.
- Round only at the very end. Rounding inputs early can shift the final answer noticeably.
- Re-run the numbers whenever an input changes, rather than estimating from an old result.
- Annual rates must be converted to the period you are calculating for (for example, divide an annual rate by 12 for a monthly figure).
Prefer not to do the maths by hand? — the Interest Only Loan Calculator does it instantly, for free, with the formula and a worked example built in.
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