🏦 Loan Repayment Calculator
Understanding Loan Repayment Methods
When you take out a loan, the repayment structure you choose has a significant impact on your total interest paid and your monthly cash flow. There are three common repayment methods, each suited to different financial situations and goals.
🏦 Picking the right repayment method can save millions of won in interest over the life of the loan.
The 3 Repayment Methods Compared
Equal Payment (EMI)
The most common structure. You pay the exact same amount every month. Early payments are mostly interest; later payments shift toward principal. Easiest to budget because the monthly amount never changes.
Equal Principal
You repay the same amount of principal each month, and interest decreases as the outstanding balance shrinks. Monthly payments start higher and gradually fall — but total interest paid is lower than equal payment.
Bullet (Interest-Only)
You pay only interest each month and repay the entire principal in one lump sum at maturity. The lowest monthly payment of the three, but the highest total interest. Common for short-term or bridge loans.
Which Method Should You Choose?
- Choose Equal Payment (EMI) if you need predictable monthly costs and stable cash flow. A natural fit for long-term mortgages.
- Choose Equal Principal if your current income is high and you want to minimize total interest paid.
- Choose Bullet repayment for short-term financing where you expect a large cash inflow at maturity (e.g., asset sale or refinancing).
Key Concepts
DSR (Debt Service Ratio)
Total monthly debt payments ÷ monthly income. Most Korean banks require a DSR of 40% or lower. Use this calculator to see how a new loan would affect your DSR before applying.
Prepayment
Most loans allow early principal repayment. Paying extra principal upfront reduces the remaining balance, which directly reduces future interest charges — most effective in the first half of the loan term.
* This calculator assumes a fixed annual interest rate. Actual loan terms, fees, and rates may vary. For reference only — not financial advice.
