An EMI, or equated monthly instalment, is the fixed amount you pay every month on a home, car or personal loan. Knowing how it is calculated helps you compare offers and plan your budget.
The formula
EMI = P x r x (1 + r)^n / ((1 + r)^n - 1), where P is the loan amount, r is the monthly interest rate (yearly rate divided by 12 and by 100) and n is the number of months.
A worked example
For a loan of 10,00,000 rupees at 8.5% for 20 years, the monthly rate is 0.00708 and n is 240. The EMI comes to about 8,678 rupees. Over 20 years you pay about 20.8 lakh in total, so more than half of it is interest.
How to use the calculator
- Enter the loan amount, yearly interest rate and period.
- Read your EMI, the total interest and the total payment.
- Turn on the schedule to see how each payment splits into interest and principal.
Ways to pay less interest
- Choose a shorter period if you can afford a higher EMI.
- Make part-prepayments when you have extra money.
- Compare rates from several lenders.
- Ask about processing fees and prepayment charges.
Early payments are mostly interest
In the schedule you will see that the first EMIs are mostly interest, while later ones are mostly principal. That is why prepaying early saves the most.
Frequently asked questions
Why is my bank's EMI slightly different?
Banks may round differently, add fees or change the rate during the loan. The result here should be very close.
Does it work for fixed and floating rates?
It assumes one rate for the whole period. For a floating rate, recalculate when the rate changes.
Is my data stored?
No.
Ready to start?
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