What is a loan EMI?
An EMI (equated monthly instalment) is the fixed amount a borrower pays every month until a loan is repaid. Each instalment covers the interest due on the outstanding balance for that month, and the rest reduces the principal. Because the balance shrinks, the interest share falls and the principal share grows, while the EMI itself stays the same.
The term is used mostly in India, but the maths is the same for a car loan, personal loan or home loan anywhere: it's the standard payment on an equal-instalment amortizing loan.
The EMI formula this calculator uses
EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1)
- P is the loan amount (principal).
- r is the monthly interest rate: the annual rate ÷ 12 ÷ 100. A 10% annual rate becomes 0.008333 per month.
- n is the tenure in months.
If you enter a 0% rate the formula can't be used (it divides by zero), so the calculator simply divides the principal by the number of months. Total payment is EMI × n, and total interest is total payment minus the principal. Results are rounded to two decimal places.
Tenure is entered in months and treated as a whole number, so 12.5 is read as 12. For a loan quoted in years, multiply by 12.
Worked example
A loan of 500,000 at an example rate of 10% a year for 60 months (5 years):
- Monthly rate: r = 10 ÷ 12 ÷ 100 = 0.0083333.
- Growth factor: (1 + r)^60 = 1.645309.
- EMI = 500,000 × 0.0083333 × 1.645309 ÷ (1.645309 − 1) = 10,623.52.
- Total payment: 10,623.52 × 60 = 637,411.34.
- Total interest: 637,411.34 − 500,000 = 137,411.34.
In the first month, interest is 500,000 × 0.0083333 = 4,166.67, so 6,456.86 of the EMI goes to principal. By the last month almost all of the EMI is principal. The loan amortization calculator shows how the balance falls year by year.
How tenure changes the EMI and total interest
Same 500,000 loan and 10% example rate, calculated with this tool:
| Tenure | Monthly EMI | Total interest | Total payment |
|---|---|---|---|
| 12 months | 43,957.94 | 27,495.32 | 527,495.32 |
| 24 months | 23,072.46 | 53,739.12 | 553,739.12 |
| 36 months | 16,133.59 | 80,809.37 | 580,809.37 |
| 60 months | 10,623.52 | 137,411.34 | 637,411.34 |
| 84 months | 8,300.59 | 197,249.73 | 697,249.73 |
| 120 months | 6,607.54 | 292,904.42 | 792,904.42 |
Doubling the tenure from 5 to 10 years cuts the EMI by about 38% but more than doubles the interest. A shorter tenure is cheaper overall if you can afford the higher instalment.
How to use the calculator
- Enter the loan amount you plan to borrow, after any down payment.
- Enter the annual interest rate the lender quotes, as a percentage.
- Enter the tenure in months (5 years = 60, 20 years = 240).
- Click Calculate to see the monthly EMI, total interest and total payment.
The calculator is currency-neutral: enter amounts in whatever currency your loan uses.
What the result leaves out
This is a plain fixed-rate EMI calculation. It doesn't account for:
- Fees and charges. Processing fees, documentation charges, mandatory insurance and taxes on fees all add to the real cost. In the US, the CFPB explains that the APR includes points and fees and is usually higher than the interest rate.
- Floating rates. If your rate is linked to a benchmark, the EMI or tenure will change when the rate resets. In India, the Reserve Bank of India's 2023 circular on resetting floating rates requires lenders to explain how a rate change affects the EMI and tenure and to give borrowers options at reset.
- Prepayments. Paying extra reduces the balance and the remaining interest, but the calculator assumes you pay exactly the EMI every month.
- Daily-interest or reducing-balance variations that some lenders use, and any broken-period interest between disbursal and the first EMI date.
Use the result to compare loan offers and test affordability, then check the lender's repayment schedule for the exact figures.
Related calculators
- Loan amortization calculator: the remaining balance at yearly milestones for a loan in years.
- Mortgage calculator: the same formula applied to a home price minus your down payment.
- Compound interest calculator: see the other side of interest, growing savings.
- Budget calculator: check whether a new EMI fits your monthly spending.
Results are estimates for illustration and aren't financial advice; your lender's actual figures may differ.
Last updated