What's the role of down payments in loan calculations with a Loan Calculator?

The size of your down payment can significantly impact the loan EMI calculated from a Loan Calculator. A down payment is the upfront amount you pay towards a loan, reducing the principal amount you must borrow.

For example, a 20% down payment on a ₹10 lakh home loan means you only borrow ₹8 lakhs. This results in a lower EMI with less interest outgo over the loan tenure compared to, say, a 10% down payment.

Most Down Payment Calculators allow the down payment percentage to be inserted separately from the loan amount. This accurately estimates the down payment amount and EMI on the reduced principal after deducting the down payment.

Additionally, the larger your down payment percentage, the lower your LTV or Loan to Value ratio. Many loan providers offer preferential interest rates to borrowers making substantial down payments. This further reduces the EMI amount.