Octal HR calculates EMIs automatically based on the loan amount, tenure, and interest rate you set. The repayment schedule is generated at the time of approval and is displayed to both HR and the employee. Payroll integration means EMI deductions happen automatically each month — no manual processing required.
Interest-Free EMI
For loans with a 0% interest rate, the EMI is simply the principal divided by the number of months:
Example — Personal Loan
Interest-Bearing EMI
Octal HR supports two interest modes for loans, selected per loan via the Interest Type field (values: none, flat, or reducing):
- Reducing balance — interest is calculated on the outstanding principal balance for each repayment period, so interest charges decrease as the loan balance is repaid.
- Flat rate — interest is calculated on the original principal for the full tenure, then added to the principal and split evenly across all instalments.
Monthly Rate (r) = Annual Rate ÷ 12
EMI = P × r × (1+r)^n ÷ ((1+r)^n − 1)
Flat rate
Total Interest = P × Annual Rate × (n ÷ 12)
EMI = (P + Total Interest) ÷ n
where P = Principal, n = Tenure in months
Example — Vehicle Loan (10% p.a.)
Repayment Schedule
The full month-by-month schedule is visible from the loan record. An example interest-bearing schedule for the first 5 months of the vehicle loan above:
| # | Month | Opening Balance | Principal | Interest | EMI | Closing Balance | Status |
|---|---|---|---|---|---|---|---|
| 1 | Jun 2025 | 500,000 | 18,905 | 4,167 | 23,072 | 481,095 | Deducted ✓ |
| 2 | Jul 2025 | 481,095 | 19,063 | 4,009 | 23,072 | 462,032 | Deducted ✓ |
| 3 | Aug 2025 | 462,032 | 19,222 | 3,850 | 23,072 | 442,810 | Current Month |
| 4 | Sep 2025 | 442,810 | 19,382 | 3,690 | 23,072 | 423,428 | Upcoming |
| 5 | Oct 2025 | 423,428 | 19,544 | 3,528 | 23,072 | 403,884 | Upcoming |
Employees can view their loan schedule in the Employee App under My Loans → [Loan Name] → Repayment Schedule. They can see exactly how many instalments remain and the outstanding balance at any point.
Waiving an Instalment
HR can waive an instalment on the loan schedule — for example when an employee is on unpaid leave or when management approves forgiving a portion of the loan. Waiving removes the instalment's amount from the outstanding balance; it does not defer the instalment or extend the closure date.
Early Repayment
Employees can repay a loan partially or in full before the scheduled end date:
| Repayment Type | How It Works | Effect on Schedule |
|---|---|---|
| Partial lump sum | Employee pays a one-time amount (e.g., from annual bonus). HR records it under Loan → Record Payment. | Outstanding balance reduced by the payment amount. Remaining scheduled instalments continue as-is; the loan simply closes earlier when the balance is exhausted. |
| Full early settlement | Employee clears the entire outstanding balance in one payment. | The balance reaches zero and Octal HR automatically settles the loan — status moves to Settled and no further payroll deductions are made. |
Payroll Integration
EMI deductions are fully automated in payroll. Here is how they flow each month:
- When a payroll run is initiated, the system checks all active loans and identifies which EMIs are due in that pay period.
- The full EMI (principal + interest, per the schedule) is added as a single deduction line on the employee's payslip, labelled Loan Repayment #<id> where
<id>is the internal loan identifier. - The outstanding loan balance in Octal HR is reduced by the EMI amount for that instalment.
- If multiple active loans exist for one employee, each loan appears as its own Loan Repayment #<id> deduction line on the payslip.
- When the outstanding balance reaches zero, the loan is automatically marked Settled.
Payslip Visibility
Employees can see each loan EMI deduction as a separate, clearly labelled line on their digital payslip. This transparency reduces HR queries about salary deductions.