What an EMI is

An equated monthly instalment (EMI) is the fixed amount you pay each month to repay a loan over a set term. Each payment covers interest on the remaining balance plus part of the principal. Early payments are mostly interest, and later payments are mostly principal.

The formula

EMI = P x r x (1 + r)^n / ((1 + r)^n - 1), where P is the loan amount, r is the monthly interest rate (annual rate / 12 / 100) and n is the number of monthly payments.

A worked example

For a loan of 1,000,000 at 12 percent a year over 60 months, r = 0.01 and n = 60. The EMI is about 22,244. Total repayment is about 1,334,667, so the interest cost is about 334,667. Over 36 months the EMI rises to about 33,214, but the total interest falls to about 195,715.

Use the calculator

  1. Open the Loan EMI Calculator.
  2. Enter the loan amount, annual interest rate and term.
  3. Read the monthly payment.
  4. Change the term or amount to compare scenarios before you commit.

What affects your EMI

  • Amount: a bigger loan means a bigger payment.
  • Rate: even a small rate change adds up over a long term.
  • Term: a longer term lowers the monthly payment but increases total interest.
  • Fees: processing, insurance and early-repayment charges are usually not in the EMI figure.

Before you borrow

  • Compare the total repayment, not just the monthly amount.
  • Check whether the rate is fixed or floating, and whether it is quoted on a reducing balance or a flat basis. Flat rates cost more than they appear.
  • Keep the payment comfortably within your budget.
  • Ask your lender for the official schedule, since this calculator gives an estimate.