Let's break down these loan types and provide conceptual examples. The underlying calculations are very similar, but the context and sometimes specific terms can vary.
The fundamental calculation for a loan's monthly payment (often called EMI in some regions) uses this formula:
Where:
Let's say you borrow ₹100,000 at an annual interest rate of 6% for 3 years (36 months).
P = ₹100,000
i = 0.06 / 12 = 0.005
n = 36
M = 100000 [ 0.005(1 + 0.005)^36 ] / [ (1 + 0.005)^36 – 1]
M ≈ ₹3,042.19
This is the most general. It takes the principal, interest rate, and loan term as input and calculates the monthly payment. The example above is a generic loan calculation.
These are specifically for loans used to purchase vehicles. Sometimes, these calculators might include fields for down payments, trade-in values, and other car-related costs. The interest rates might also be different based on the type of car (new or used).
These are for loans secured by real estate. They often involve larger loan amounts and longer terms (e.g., 15 or 30 years). They may also include fields for property taxes, insurance, and other escrow items, which are added to the monthly payment. "Mortgage" is more common in some countries, while "Home Loan" is more common in others.
These are unsecured loans (not backed by collateral) and are typically for smaller amounts and shorter terms than home loans. Interest rates tend to be higher because they are unsecured.
This type of loan uses the equity you have in your home as collateral. The loan amount is usually based on a percentage of your home's value minus the amount you still owe on your mortgage.
These loans are specifically for education expenses. They might have different repayment terms and interest rates than other loan types. Some student loans may have periods of deferment where payments are not required.
| Loan Type | Collateral | Typical Term | Interest Rates | Other Features |
|---|---|---|---|---|
| Generic Loan | None/Asset | Short/Medium | Varies | Basic calculation |
| Auto/Car Loan | Vehicle | Short/Medium | Varies | Down payment, trade-in |
| Home/Mortgage Loan | Real Estate | Long | Lower | Property taxes, insurance, escrow |
| Personal Loan | None | Short | Higher | Unsecured |
| Home Equity Loan | Home Equity | Medium | Varies | Based on home value and existing mortgage |
| Student Loan | None | Long | Varies | Deferment options, specific repayment plans |