EMI Calculator
Use this EMI calculator to calculate monthly loan EMI, total interest, and total payment. Ideal for planning home loans, car loans, and personal loans accurately.
How EMI is Calculated?
EMI (Equated Monthly Installment) is calculated using the standard amortization formula used by all Indian banks.
EMI = P × r × (1 + r)^n / [(1 + r)^n – 1]
- P = Loan Amount
- r = Monthly Interest Rate (Annual Rate / 12 / 100)
- n = Loan tenure in months
- The EMI includes both principal and interest.
What is EMI?
EMI (Equated Monthly Installment) is the fixed amount you pay every month to repay a loan. It includes both principal repayment and interest charged by the lender over the loan tenure.
EMI calculators help borrowers understand how changes in loan amount, interest rate, or tenure affect monthly payments. This allows better financial planning before taking a home loan, car loan, or personal loan.
By calculating EMI in advance, borrowers can choose a loan structure that balances affordability with total interest cost.
FAQ
How is EMI calculated for loans?
EMI is calculated using the amortization formula based on loan amount, interest rate, and loan tenure. The EMI stays constant, while the interest and principal portions vary each month. Banks follow the reducing balance method to determine interest distribution.
Why is the interest portion higher in the early months?
At the start of the loan, the outstanding principal is high, so the interest charged is also higher. Over time, as the principal reduces, the interest portion decreases and more of the EMI goes toward repaying the principal.
Can I reduce my EMI amount?
Yes. EMI can be reduced by increasing the loan tenure, refinancing to a lower interest rate, or making part-prepayments. All these methods reduce your financial burden depending on your repayment strategy.
Does increasing tenure lower EMI?
Increasing the tenure lowers your EMI significantly, making loan repayment easier. However, it increases the total interest paid over the life of the loan, making the loan costlier overall.
Is EMI the same for home, car, and personal loans?
The EMI formula is the same for all loan types, but interest rates and tenures differ. Personal loans typically have higher interest rates, while home loans offer longer tenures and lower monthly payments.