How EMI Is Calculated
EMI is the fixed amount you pay every month on a loan. It is calculated from the loan amount, the interest rate and the loan period.
The formula
EMI = P x r x (1 + r)^n / ((1 + r)^n - 1)
- P = loan amount (principal)
- r = monthly interest rate (annual rate / 12 / 100)
- n = number of monthly instalments
Worked example
Loan of ₹10,00,000 at 9% a year for 5 years. Here r = 0.0075 and n = 60.
- EMI is about ₹20,758
- Total paid over 5 years: about ₹12,45,501
- Total interest: about ₹2,45,501
Try your own numbers in the EMI Calculator, which also shows the month-by-month schedule.
Ways to lower your EMI or total interest
- Choose a longer tenure. EMI falls, but total interest rises.
- Make a larger down payment so the loan is smaller.
- Prepay part of the principal when you can.
- Compare interest rates from more than one lender.
Interest in the early months
In the first instalments most of your EMI goes towards interest. Over time the principal part grows. The schedule table in the calculator makes this visible.
Frequently asked questions
Is the EMI the same every month?
For a fixed-rate loan, yes. For floating-rate loans the EMI or tenure may change when the rate changes.
Does the EMI include processing fees?
No. The calculator covers principal and interest only. Fees and insurance are extra.
Does a longer tenure save money?
It lowers the monthly EMI but increases the total interest you pay.