How EMI is calculated
An Equated Monthly Instalment (EMI) is the fixed amount you pay your lender each month until a loan is repaid. It combines interest and principal, and this calculator uses the standard formula to work out your EMI, the total interest, and the total amount you will repay.
The formula is EMI = P·r·(1+r)ⁿ / ((1+r)ⁿ − 1), where P is the loan amount, r is the monthly interest rate (annual rate divided by 12, then by 100), and n is the number of monthly instalments.
What drives your EMI
- Loan amount: a bigger principal means a bigger EMI, in direct proportion.
- Interest rate: even a small rate change moves the EMI and, over a long tenure, the total interest substantially.
- Tenure: a longer tenure lowers the monthly EMI but increases the total interest you pay over the life of the loan.
The tenure trade-off
It is tempting to pick the longest tenure to get the smallest EMI, but that comfort is expensive. Stretching a loan from 15 to 20 years lowers each month's payment, yet you pay far more interest overall. If your budget allows, a shorter tenure or occasional prepayments can save a large amount of interest. Try different tenures above and watch how the total interest figure moves.
A worked example
On a ₹25,00,000 home loan at 9% for 20 years, the monthly rate is 0.75% and there are 240 instalments. The EMI works out to about ₹22,493, and over the full term you repay roughly ₹53,98,000, of which around ₹28,98,000 is interest, more than the amount you borrowed. This is why the rate and tenure matter so much on long loans.
Frequently asked
What is an EMI?
An Equated Monthly Instalment is the fixed amount you pay a lender each month until your loan is fully repaid. Each EMI contains both interest and principal; in the early months most of it is interest, and later most of it is principal. The EMI itself stays constant (unless the interest rate changes on a floating-rate loan).
How is EMI calculated?
Using the formula EMI = P·r·(1+r)ⁿ / ((1+r)ⁿ − 1), where P is the loan amount, r is the monthly interest rate (the annual rate divided by 12 and by 100), and n is the total number of monthly instalments. This calculator applies that formula and also shows your total interest and total repayment.
Does a longer tenure reduce the total cost?
No, it does the opposite. A longer tenure reduces each monthly EMI, which eases cash flow, but it increases the total interest you pay over the life of the loan because you owe the balance for longer. A shorter tenure costs more each month but far less overall.
How do prepayments help?
Prepaying reduces the outstanding principal, which means less interest accrues on the remaining balance. On a long loan, even occasional prepayments early in the tenure, when the balance is highest, can save a substantial amount of total interest and shorten the loan. Many lenders allow prepayment of floating-rate loans without penalty.
Is the calculated EMI exactly what I will pay?
It is accurate for a fixed interest rate. On a floating-rate loan, the EMI or tenure can change when the lender revises rates. Lenders may also add processing fees, insurance or other charges that are not part of the pure EMI. Treat the result as a close estimate for planning.