EMI Calculator

Calculate Equated Monthly Installments (EMI) for home, car, or personal loans. Generate standard interest summaries and amortization schedules.

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How EMIs Are Calculated on a Reducing Balance

An equated monthly instalment (EMI) is the fixed amount you repay a lender every month until the loan closes. Under the reducing balance method that Indian banks and NBFCs use for home, car, personal and education loans, each EMI is split into two parts: interest on the outstanding balance for that month, and repayment of principal. As the balance falls, the interest portion shrinks and the principal portion grows. The month-by-month record of that shift is the amortization schedule. Our guide to what an EMI is covers the mechanics in full.

Tenure changes the picture dramatically. A ₹50 lakh home loan at 8.5% for 20 years carries an EMI of roughly ₹43,400, and the total interest of about ₹54 lakh exceeds the amount borrowed. Stretch the same loan over 30 years and the EMI falls to roughly ₹38,400, but total interest balloons past ₹88 lakh, a reminder that a lower EMI is not automatically cheaper.

It helps to see loan interest as compounding working in reverse: the same force that builds wealth for investors keeps charging on whatever you still owe, while a fixed EMI becomes lighter in real terms as inflation erodes the value of money. Borrowers who want to cut the cost explore prepayment. Our loan prepayment calculator shows how extra monthly payments shorten the loan, and weighing prepayment against investing the same surplus is an prepayment vs investing decision, not just arithmetic.

Popular EMI Calculations

Click on any of the popular search scenarios below to load the calculator with pre-configured values:

Frequently Asked Questions

What is the EMI formula?
EMI is calculated as P × r × (1 + r)^n ÷ ((1 + r)^n - 1), where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12) and n is the tenure in months. A ₹50 lakh loan at 8.5% for 20 years, for example, works out to an EMI of about ₹43,400. Enter your own values above and the calculator applies this formula instantly.
What is the difference between a flat interest rate and a reducing balance rate?
A flat rate is charged on the entire principal for the whole tenure, so the real cost is much higher than the headline suggests. A flat-rate quote always looks cheaper than the equivalent reducing balance rate. Reducing balance is the norm for home, car and personal loans in India: interest is charged only on what you still owe, and this calculator models that basis.
Does a floating interest rate change my EMI?
When the benchmark rate moves, Indian lenders on floating-rate loans usually adjust the remaining tenure first and leave the EMI unchanged, unless you ask for an EMI reset. If your ₹50 lakh, 20-year loan rate rises from 8.5% to 9% and the tenure stays fixed, the EMI increases by roughly ₹1,600 per month.
Does prepaying a loan reduce the tenure or the EMI?
After a part-prepayment, most lenders let you choose: keep the same EMI and shorten the tenure, or keep the same tenure and lower the EMI. Shortening the tenure saves more total interest, while lowering the EMI frees up monthly cash flow, so the answer depends on whether long-term savings or monthly breathing room matters more to you.

Formula & Mathematical Approach

Equated Monthly Installment (EMI) for reducing-balance loans.

r=Annual Rate12×100r = \frac{\text{Annual Rate}}{12 \times 100}
EMI=P×r×(1+r)Months(1+r)Months−1\text{EMI} = \frac{P \times r \times (1 + r)^{\text{Months}}}{(1 + r)^{\text{Months}} - 1}
Show Plain Text / Excel Formula
Monthly Rate (r) = Annual Rate / 12 / 100
EMI = [P * r * (1 + r) ^ Months] / [(1 + r) ^ Months - 1]

Key Assumptions

  • Interest rate remains fixed during the loan tenure.
  • Payments are made at the end of each month.
  • No prepayments or penalty fees are included.