EMI Calculator

EMI (Equated Monthly Installment) is the fixed amount a borrower pays each month to repay a loan over a set tenure. Each installment is split between two parts: interest on the outstanding balance, and a chunk of principal that reduces that balance. As the balance falls, the interest portion shrinks and the principal portion grows, but the total monthly payment stays constant on a fixed-rate loan.

Banks use EMI to underwrite home loans, auto loans, personal loans, and education loans. The EMI is the single number that decides affordability — most lenders cap it at 40–50% of monthly income.

Enter the loan amount (principal), the annual interest rate as a percentage (e.g. 8.5 for 8.5% per year), and the tenure in years and additional months. The EMI Calculator converts the annual rate to a monthly rate, applies the standard amortisation formula, and returns the monthly EMI, the total amount payable over the tenure, and the total interest cost.

To compare scenarios, change one input at a time — for example, shorten the tenure by five years to see how much interest you save, or raise the rate by one percentage point to stress-test a floating-rate loan.

E = P · r · (1 + r)^n / ((1 + r)^n − 1)

P = principal (loan amount)
r = monthly interest rate = annual_rate / 12 / 100
n = number of monthly installments = years × 12 + months
E = monthly EMI

The formula derives from the present-value-of-annuity equation: the sum of the present values of all future EMIs (discounted at the monthly rate) equals today's principal. Solving for E gives the closed form above.

Total amount payable is simply E × n, and total interest is E × n − P.

Consider a home loan of ₹25,00,000 at 8.5% per year for 20 years.

P = 2,500,000
annual rate = 8.5%
r = 8.5 / 12 / 100        = 0.00708333
n = 20 × 12               = 240

(1 + r)^n
  = (1.00708333)^240
  ≈ 5.441243

numerator   = P · r · (1 + r)^n
            = 2,500,000 × 0.00708333 × 5.441243
            ≈ 96,355.34

denominator = (1 + r)^n − 1
            ≈ 4.441243

EMI = numerator / denominator
    ≈ 96,355.34 / 4.441243
    ≈ ₹21,695.58 per month

Total payable  = EMI × n = 21,695.58 × 240 ≈ ₹52,06,939
Total interest = Total payable − P         ≈ ₹27,06,939

Over 20 years, the borrower pays back more than double the principal — about ₹27.07 lakh of interest on a ₹25 lakh loan. The amortisation breakdown changes dramatically across the tenure:

In month 1, 82% of the EMI is interest; in month 240, less than 1% is. This is why prepayments made early in the tenure have outsized impact.

Stretching the tenure lowers the monthly EMI but raises the total interest paid — often by a wide margin. The table below shows EMI and total interest on a ₹10,00,000 principal across common rate × tenure combinations.

Going from 10 to 20 years at 9% drops the EMI by about 29% but more than doubles total interest (from ₹5.20 lakh to ₹11.59 lakh). Going from 8% to 10% at 20 years adds about ₹3.09 lakh in interest on the same principal — roughly ₹1,290 extra per month.

A fixed-rate loan locks the interest rate for the entire tenure (or a stated initial period). The EMI is fully predictable, which makes budgeting easier, but the bank charges a premium — typically 50 to 150 basis points above the equivalent floating rate — to take on the rate risk.

A floating-rate loan tracks an external benchmark (in India, the RBI repo rate; in the US, SOFR or prime). When the benchmark moves, the lender either resets the EMI or — more often — keeps the EMI constant and changes the tenure. Floating rates start lower but expose the borrower to rising-rate cycles. Most home loans in India are floating; most auto and personal loans are fixed.

A prepayment is any payment above the scheduled EMI. Because the interest portion of each EMI is computed on the outstanding balance, knocking the balance down early eliminates future interest entirely. Two common strategies:

• One extra EMI per year — on a 20-year loan, this typically clears the loan 3–4 years early and cuts total interest by 15–25%.
• Lump-sum prepayment — using a bonus or windfall to retire ₹1–5 lakh of principal in year 2 or 3 saves far more than the same amount paid in year 15.

Most floating-rate home loans carry no prepayment penalty in India (RBI rule); fixed-rate loans and most auto/personal loans may charge 2–4% of the prepaid amount. Always check the sanction letter before prepaying.

• Confusing annual and monthly rate. The formula needs the monthly rate (annual ÷ 12 ÷ 100). Plugging in 8.5 instead of 0.00708 gives a wildly wrong EMI.
• Ignoring processing fees and insurance. A 1% processing fee on a 25 lakh loan is ₹25,000 upfront — not captured in the EMI itself. Compare the all-in cost.
• Treating EMI as the total cost. A lower EMI from a longer tenure can mean dramatically more interest. Look at total payable, not just monthly outflow.
• Forgetting reset frequency on floating rates. Some floating loans reset every 3 months, others annually. The shorter the reset, the faster benchmark moves hit the EMI.

What is an EMI?

EMI stands for Equated Monthly Installment — a fixed payment a borrower makes to a lender every month until a loan is repaid. Each EMI covers part of the principal and part of the interest accrued for that month. The amount stays constant for a fixed-rate loan, but the principal-to-interest split shifts over time.

Which inputs drive the EMI formula?

Three values: principal (P, the loan amount), the periodic interest rate (r, the annual rate divided by 12 for a monthly EMI), and the number of installments (n, tenure in months). The standard formula is E = P·r·(1+r)^n / ((1+r)^n − 1). All three move the EMI: a larger P or higher r raises it; a longer n lowers the monthly payment but raises total interest.

Fixed rate vs floating rate — which produces a stable EMI?

A fixed-rate loan locks the interest rate for the full tenure (or for an initial period), so the EMI is predictable and unchanged. A floating-rate loan is tied to a benchmark (repo rate, MCLR, SOFR), so the EMI — or more often the tenure — adjusts when the benchmark moves. Fixed rates trade flexibility for certainty and usually start 50–150 basis points above floating rates.

How does tenure affect total interest paid?

Doubling the tenure does not double the interest — it grows much faster, because a smaller share of each EMI goes to principal in early months. For example, a 10 lakh loan at 9% costs about 5.2 lakh in interest over 10 years but about 11.6 lakh over 20 years. A shorter tenure raises monthly outflow but cuts total cost sharply.

How much can prepayment save?

Prepayment reduces the outstanding principal, so subsequent EMIs accrue interest on a smaller balance. Paying one extra EMI per year on a 20-year loan typically shortens the tenure by 3–4 years and saves 15–25% of total interest. Prepaying earlier in the tenure saves more, because that is when interest dominates each EMI.

Does my credit score change the EMI?

It changes the rate, which changes the EMI. A score above 750 usually qualifies for the lender's lowest published rate; a score in the 650–700 band may add 50–200 basis points. On a 25 lakh, 20-year loan, a 1-percentage-point higher rate raises the EMI by roughly 1,600 rupees per month and the total interest by about 3.8 lakh.

What are step-up and step-down EMI plans?

A step-up EMI starts low and increases at fixed intervals — useful for early-career borrowers expecting income growth. A step-down EMI starts high and decreases — useful when income is expected to fall, such as nearing retirement. Both deviate from the standard equated formula above, so the lender computes a schedule that still amortises the loan over the tenure.