Loans: real EMI, hidden charges, prepayment
The Plan section, which includes Loans, is part of Porul Premium, with a 7-day free trial. See Pricing.
The problem
Section titled “The problem”A loan is a long promise with a few numbers on it. Two things are hard to see:
- Is the EMI I was quoted the same as the EMI the maths gives? Fees can be folded into the monthly instalment without being listed.
- What would extra payments actually change? Should they shorten the loan or lower the instalment, and by how much?
(An EMI, or equated monthly instalment, is the fixed amount you pay each month on a loan.)
How Porul handles it
Section titled “How Porul handles it”1. Add a loan
Section titled “1. Add a loan”Enter the lender (or a nickname), the loan type (home, personal, auto, education or other), the amount, the annual interest rate, the tenure (in years or months) and the start date. You can also enter processing fees and the EMI your bank quoted.
Porul calculates the fair EMI from your amount, rate and tenure using the standard formula:
EMI = P × r × (1+r)^n ÷ ((1+r)^n − 1), where P is the amount, r the monthly rate (annual rate ÷ 12 ÷ 100) and n the number of months.
2. Hidden-charge check
Section titled “2. Hidden-charge check”If you enter your bank’s quoted EMI, Porul compares it with the fair EMI:
- If the bank’s EMI is higher, the difference means there are charges inside the instalment. Porul shows both EMIs side by side and the hidden cost: the amount of extra principal the bank’s EMI implies beyond the amount you entered.
- If the bank’s EMI is lower than the fair EMI, the details probably don’t match and Porul flags it as an input error to double-check.
3. Full schedule and live status
Section titled “3. Full schedule and live status”The loan page shows total principal cleared, total interest paid, interest left and total payable, plus a month-by-month schedule split into interest and principal. Payments you log against the loan are reflected in it.
4. Prepayment planner
Section titled “4. Prepayment planner”Open Plan Prepayment to try scenarios without committing to anything:
- Recurring (monthly, quarterly, half-yearly, yearly) or one-time extra payments.
- A goal for each plan: reduce the tenure (keep the EMI, finish earlier), reduce the EMI (keep the tenure, pay less each month), or a custom timeline that mixes both.
- An optional snowball setting: when the EMI drops, the difference keeps going to principal so your total outflow stays the same.
Porul shows the projected closure date, interest saved and time saved. Past months always use your real payments; a plan only applies to months that haven’t happened yet.
5. Monthly Debt Ratio (MDR)
Section titled “5. Monthly Debt Ratio (MDR)”On the Plan page’s Loans tab, the gauge shows your MDR: total monthly EMIs divided by your monthly income. Beside it you’ll see your free cash (income minus EMIs), your monthly EMI total and your total debt. The gauge uses colour bands at 30% and 50% to show where you fall; it is a reading, not a judgement.
6. Connect it to your budget
Section titled “6. Connect it to your budget”Switch Add to Budget on a loan and its EMI becomes a fixed bill. It then counts toward your Daily Life Cost and reduces your surplus. See Budget and Daily Life Cost.
Example
Section titled “Example”A loan of 100,000 at 10% a year over 5 years (60 months):
| Fair EMI | 2,124.70 |
| Total payable | 127,482 |
| Total interest | 27,482 |
Hidden charges. Your bank quotes an EMI of 2,300. That instalment implies a principal of about 108,250, which is roughly 8,250 more than the 100,000 you entered.
Prepayment. Add 200 extra every month with the goal reduce tenure:
| Without | With 200/month | |
|---|---|---|
| Months to close | 60 | 54 |
| Total interest | 27,482 | about 24,349 |
That is about 6 months sooner and about 3,133 less interest. Figures are illustrative; Porul recalculates from your own loan.
Porul’s EMI uses the nominal annual rate. Your lender’s own calculation may differ slightly.