Staying informed about your upcoming EMIs is crucial while repaying a loan.
By keeping track of your repayment schedule, you can effectively plan your finances, prevent any EMI payment defaults, and ensure your loan repayment stays on track. A repayment schedule provides valuable insights into all upcoming loan EMIs, allowing you to manage expenses efficiently.
What is a repayment schedule?
A repayment schedule is a document that provides you with a detailed plan for your loan repayment through a series of equated monthly instalments (EMIs). This document also has an amortisation table, showing how the principal and interest are divided in each EMI. The schedule contains all the necessary information about your EMIs for the entire repayment period.
How does a personal loan repayment schedule work?
A personal loan repayment schedule is a structured plan that outlines how a borrower must repay the borrowed amount along with interest within a predefined tenure. It provides a clear breakdown of each monthly instalment, specifying how much goes towards the principal and interest. Lenders offer this schedule at the time of loan approval, ensuring transparency in repayment obligations.
Components of a Personal Loan Repayment Schedule
Equated Monthly Instalments (EMIs)
The repayment is made in fixed EMIs, calculated using the loan amount, interest rate, and tenure. The EMI remains constant in most cases unless the borrower opts for prepayment or restructuring.Breakdown of Principal and Interest
Initially, a significant portion of the EMI covers interest, while the principal repayment is lower. As the loan progresses, the interest component reduces, and the principal repayment increases. This structure is called an amortisation schedule.Amortisation Schedule
An amortisation schedule is a detailed table showing the EMI distribution across principal and interest throughout the tenure. Borrowers can track how much they owe and how their outstanding balance decreases over time.Repayment Tenure
The repayment period usually ranges from 12 months to 60 months, depending on the lender’s policies and the borrower's preference. A longer tenure results in smaller EMIs but higher overall interest costs.Prepayment and Foreclosure
Borrowers can make prepayments or foreclose the loan before the tenure ends. Partial prepayment reduces the outstanding principal, lowering the interest burden. However, some lenders may charge a prepayment or foreclosure fee.Missed Payments and Penalties
Missing EMIs attracts penalties and negatively impacts credit scores. Lenders may impose late payment fees and higher interest rates on overdue amounts.
A well-structured repayment schedule helps borrowers plan their finances efficiently. By understanding their loan obligations, they can avoid defaults and minimise interest outgo through strategic prepayments.
Loan Repayment Schedule Components
Loan amount: This is the amount that you’ve borrowed from the lender.
Agreement number: This number serves as the identification for your loan agreement. The loan agreement is a crucial document containing all the terms and conditions under which you’ve borrowed the money.
Tenure: This is the duration that you’ve opted to repay your loan.
EMI due date: It is a pre-set date on which your monthly instalments get deducted from your registered bank account.
Opening principal: This is the amount that you need to repay. As you keep paying your loan EMIs, this amount reduces. You can check all these details with your repayment schedule.
Instalment amount: Your loan amount is divided into small, fixed instalments over a specific period. This is known as your loan EMI, which usually consists of both the principal and interest components.
Principal amount: This section gives you the breakup of the principal amount you need to pay in each monthly instalment.
Interest amount: This section gives you the breakup of the interest component in your monthly instalments.
The annualised rate of interest: This is the rate of interest at which you’ve borrowed the loan.
How it is calculated: Loan amortisation with formula
Loan amortisation is the process of repaying a loan through fixed monthly instalments (EMIs) over a specific tenure. Each EMI consists of two components: principal and interest. Initially, a larger portion of the EMI goes towards interest, while the principal repayment is lower. Over time, the interest component reduces, and the principal repayment increases.
Formula for EMI Calculation
The EMI for a loan is calculated using the standard loan amortisation formula:
EMI=P×r×(1+r)n(1+r)n−1EMI = \frac{P \times r \times (1 + r)^n}{(1 + r)^n - 1}EMI=(1+r)n−1P×r×(1+r)n
Where:
- P = Loan principal amount
- r = Monthly interest rate (annual rate divided by 12 and converted into decimal form)
- n = Loan tenure in months
Breakdown of Loan Amortisation
- Interest and Principal Allocation
- In the early stages of repayment, a significant portion of the EMI covers interest.
- Gradually, as the outstanding principal decreases, the interest component reduces, and a higher portion of the EMI goes towards repaying the principal
- Amortisation Schedule
- An amortisation schedule is a table that shows the division of each EMI into principal and interest components for every month.
- It also displays the outstanding balance after each EMI payment, helping borrowers track their repayment progress.
Example Calculation
Suppose a borrower takes a loan of ₹5,00,000 at an annual interest rate of 10% for a tenure of 3 years (36 months).
- Monthly interest rate = 10%/12=0.008310\% / 12 = 0.008310%/12=0.0083
- Using the formula, the EMI is calculated.
By referring to an amortisation schedule, the borrower can see that in the first few months, most of the EMI covers interest, but towards the end, the majority of the EMI goes towards principal repayment.
Loan amortisation ensures systematic repayment and helps borrowers plan their finances effectively. Understanding this concept can aid in making informed financial decisions, especially when opting for prepayments to reduce interest costs.
How to download your loan repayment schedule?
If you have an ongoing loan with us, use Bajaj Finserv loan services and download your repayment schedule in a few simple steps. You can go to our service portal on the web or use our app to get your repayment schedule easily.
Download your loan repayment schedule via customer portal
If you are on our customer portal, you can follow these simple steps
- Click on the ‘Download’ button on this page to visit Bajaj Finance service portal
- Enter your registered mobile number and the OTP to sign-in
- Verify your details by entering your date of birth
- Select the loan account for which you want to download the repayment schedule
- Click on ‘Repayment Schedule’ to download it
Download your loan repayment schedule via app
If you are on our app, you can follow these simple steps to download your repayment schedule.
- Click on the ‘Download’ button on this page to go to the ‘Document Centre’ section
- Go to the ‘Loans’ section to view your loan accounts
- Select the loan account for which you want to download documents
- Download your repayment schedule by clicking on it
