💹 EMI Calculator
EMI is the equated monthly instalment: the same amount every month until the loan clears. Enter the amount, the rate and the tenure and you get the instalment, the total interest, and how the principal-interest split moves year by year.
What an EMI is, and where the money actually goes
EMI stands for equated monthly instalment: the same payment every month for the whole tenure, covering both interest and principal. The amount never changes, but what it buys does. Early instalments are almost entirely interest; late ones are almost entirely principal.
EMI = P × r × (1+r)n / [ (1+r)n − 1 ]
P is the loan amount, r the monthly rate (annual rate divided by 12 and by 100) and n the tenure in months. Every bank uses this formula, so a quote that differs is adding fees rather than using different mathematics.
The shape of a long tenure
| Year | Principal repaid | Interest paid | Balance left |
|---|---|---|---|
| 1 | ₹66,000 | ₹2,94,000 | ₹24,34,000 |
| 5 | ₹92,000 | ₹2,68,000 | ₹21,16,000 |
| 10 | ₹1,40,000 | ₹2,20,000 | ₹15,88,000 |
| 15 | ₹2,14,000 | ₹1,46,000 | ₹7,78,000 |
| 20 | ₹2,50,000 | ₹16,000 | ₹0 |
In the first year, 82% of what you pay is interest. Over the full twenty years the interest comes to more than the amount borrowed. That is not a quirk of this example: on any loan where the tenure in years multiplied by the rate exceeds roughly 130, total interest exceeds the principal.
Tenure is the expensive variable
| Tenure | EMI | Total interest |
|---|---|---|
| 10 years | ₹30,993 | ₹12,19,000 |
| 15 years | ₹24,617 | ₹19,31,000 |
| 20 years | ₹21,696 | ₹27,07,000 |
| 25 years | ₹20,133 | ₹35,40,000 |
| 30 years | ₹19,220 | ₹44,19,000 |
Going from 20 years to 30 reduces the EMI by ₹2,476, about 11%, and adds ₹17,12,000 of interest, about 63%. Lenders push longer tenures because the monthly figure is what customers compare, and it is the one number that makes the expensive option look cheaper.
A useful discipline when a bank offers a longer tenure to make the EMI fit: take the longer tenure for the safety margin, then voluntarily pay the shorter tenure's EMI. You get the lower obligation and most of the saving.
Prepayment
Because interest accrues on the outstanding balance, a prepayment early in the tenure removes interest for every remaining month. On the loan above, a single ₹2,00,000 prepayment in year two saves roughly ₹6,80,000 of interest and shortens the tenure by about three years. The same prepayment in year fifteen saves under ₹60,000.
Ask the lender whether a prepayment reduces the tenure or the EMI. Reducing the tenure saves far more; reducing the EMI only improves cash flow. Most lenders default to one or the other without asking.
Fixed and floating rates
A fixed rate keeps the EMI constant for the whole tenure, which buys certainty at a premium of typically one to two percentage points. A floating rate moves with a benchmark, and lenders usually absorb the change by extending the tenure rather than raising the EMI, which is why a floating-rate borrower can find their loan has quietly grown by four years after a rate cycle. Check your amortisation statement after any rate change rather than assuming the EMI tells the whole story.
A worked example
A ₹35,00,000 home loan at 8.75% over 25 years gives an EMI of ₹28,760. Total repayment is ₹86,28,000, of which ₹51,28,000 is interest. Raising the EMI by just ₹3,000 a month to ₹31,760 clears the loan in 20 years and 2 months and saves about ₹13,50,000 in interest, which is 4.6 times the extra you paid in.
Two neighbours worth knowing: the loan calculator, for the question this one leads into, and the amortization calculator, which answers it from the other direction.
Frequently Asked Questions (FAQs)
How is EMI calculated?
With the standard annuity formula: the loan amount times the monthly rate times (1 plus the monthly rate) raised to the number of months, divided by that same bracket minus one. The monthly rate is the annual rate divided by twelve. Every lender uses the same formula.
Does prepaying a loan reduce the EMI or the tenure?
Either, depending on what you ask for. Reducing the tenure saves far more interest because the balance clears sooner; reducing the EMI only improves monthly cash flow. Most lenders will do whichever you request, but they will pick a default if you do not.
Why is most of my early EMI interest?
Because interest is charged on the outstanding balance, and at the start the balance is the entire loan. The split reverses gradually: on a 20-year loan at 8.5%, the crossover where principal exceeds interest arrives around year twelve.
Is a longer tenure ever the right choice?
When the shorter EMI would leave no margin for emergencies, yes. A longer tenure with voluntary overpayments gives you the lower obligation and most of the saving. Taking a long tenure and never overpaying is the expensive version.
What is a moratorium or EMI holiday?
A pause in payments, usually granted in hardship. Interest normally continues accruing during the pause and is added to the balance, so a three-month holiday on a large loan can add considerably more than three months to the tenure. It is relief, not forgiveness.
How does the EMI change if rates rise on a floating loan?
Most lenders keep the EMI the same and extend the tenure instead, up to a limit, after which the EMI rises. This is why a floating-rate loan can silently gain years. Request an updated amortisation schedule after every rate revision.
Can I use this for a car or personal loan?
Yes. The formula is the same for any loan repaid in equal instalments, only the amounts and tenures differ. For a car specifically, the auto loan calculator also handles deposits and trade-ins.