How is EMI calculated?
Banks use the reducing-balance formula EMI = P × r × (1+r)n ÷ [(1+r)n − 1], where P is the loan amount, r is the monthly rate (annual ÷ 12 ÷ 100) and n is the number of months. Each EMI is part interest, part principal; early payments are mostly interest, later ones mostly principal.
A worked example
Borrow ₹10,00,000 at 9% for 20 years and the EMI is about ₹8,997. Over the full tenure you repay roughly ₹21.6 lakh — about ₹11.6 lakh of it pure interest. Shortening the tenure raises the EMI but can save lakhs in interest; try it above.
Frequently asked questions
Does a lower interest rate always lower the EMI?
Yes — for the same amount and tenure, a lower rate reduces both the monthly EMI and the total interest.
Why is my bank's EMI slightly different?
Lenders may add processing fees, insurance or GST on interest and round differently, so the final figure can vary a little from the pure formula.
Can I use it for any loan?
Yes. The maths is identical for home, car and personal loans — just enter that loan's amount, rate and tenure.
Does prepaying help?
A lump-sum prepayment early in the loan goes straight against the principal, where it saves the most interest.
Related tools
This tool gives estimates for general information only and is not financial advice. Confirm exact figures with your bank, lender or a qualified advisor.