EMI Calculator
Calculate monthly instalments for home, car & personal loans
How EMI is calculated — the maths behind your monthly payment
Every EMI you pay is a mix of two parts: a chunk that reduces your outstanding loan balance (principal) and a chunk that goes to the bank as profit (interest). Early in the loan, interest eats up the larger share. By the final years, almost every rupee goes toward principal. This shift is called amortization, and understanding it changes how you think about prepayments.
On a 20-year home loan at 8.5%, that means 240 monthly payments. The formula guarantees each payment is identical, but the internal split between principal and interest changes every single month.
₹40.0L loan — two banks, very different outcomes
Bank B's "lower" EMI costs ₹14.2L extra. The calculator above shows this split instantly.
Three mistakes that cost borrowers thousands
Choosing tenure by EMI alone
A 30-year tenure on ₹50.0L at 9% brings EMI down to ₹40,232 — comfortable on paper. But total interest balloons to ₹94.8L, nearly double the loan itself. The same loan at 15 years costs ₹50,713/month but saves you ₹53.0L in interest. Always check the total cost, not just the monthly number.
Ignoring a 0.25% rate difference
Quarter-percent differences sound trivial. On a ₹60.0L, 20-year loan, the gap between 8.5% and 8.75% adds ₹1,002 to your monthly EMI and ₹2.4L to your total outgo. Before you sign, get written quotes from at least three lenders and negotiate.
Skipping the scenario tool
The "Save Scenario" button above lets you lock a combination and compare it side by side with another. Most borrowers who compare three scenarios discover a better option they would have missed otherwise.
How prepayment changes the equation
When you make a lump-sum prepayment, the entire amount reduces your outstanding principal directly. On a ₹50.0L, 20-year loan at 8.5%, a one-time prepayment of ₹2.0L at end of year 3 saves roughly ₹5.8L in total interest and shortens your loan by about 14 months.
Most banks let you choose: reduce tenure (saves more money) or reduce EMI (eases monthly pressure). Many lenders allow penalty-free prepayment on variable-rate home loans. Fixed-rate and personal loans may carry fees of 2–4%.
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Results are projections based on the formula provided. Actual EMI may vary based on processing fees, prepayment charges, and bank-specific terms. This tool does not constitute financial advice — consult your lender or a qualified advisor before taking a loan.
Frequently Asked Questions
What is EMI and how does it work?
EMI stands for Equated Monthly Instalment. It is a fixed payment you make every month to repay a loan. Each EMI contains two parts — a principal portion that reduces the outstanding balance and an interest portion that is the bank's charge. In the early months, interest takes the larger share; towards the end, most of the EMI goes to principal.
How is EMI calculated using the formula?
The standard formula is EMI = [P × R × (1+R)^N] / [(1+R)^N – 1]. P is the principal loan amount, R is the monthly interest rate (annual rate divided by 12, then by 100), and N is the tenure in months. For example, a large home loan at 8.5% for 20 years gives R = 0.00708 and N = 240. Use the calculator above to see the exact EMI for your loan amount.
What is a safe EMI-to-income ratio?
Most lenders recommend that your total EMI obligations should not exceed 40-50% of your monthly take-home salary. For home loans specifically, keeping the single loan EMI within 30-35% of net income is considered safe. Going beyond this threshold increases the risk of financial strain during emergencies.
Does making a prepayment reduce EMI or loan tenure?
Banks typically offer both options. Reducing tenure keeps your EMI the same but ends the loan earlier, saving significantly more on total interest. Reducing EMI lowers your monthly outgo but keeps the original timeline. On a variable-rate home loan, many lenders waive prepayment penalties entirely.
How much difference does 0.5% interest rate make on a home loan?
Even a small rate difference has a big impact over long tenures. On a 20-year home loan, moving from 8.5% to 9% can add several percentage points to total interest. A 0.25% reduction saves significantly on any large, long-tenure loan — which is why comparing rates across lenders is worth the effort.
Key Terms
EMI
Equated Monthly Instalment — the fixed amount you pay every month to repay a loan over its tenure.
Principal
The original loan amount borrowed, excluding any interest charged.
Amortization
The process of gradually paying off a loan through scheduled periodic payments of principal + interest.
Tenure
The duration of the loan, typically expressed in months or years. Longer tenure = lower EMI but higher total interest.