What is EMI?
EMI stands for Equated Monthly Instalment: the fixed amount you pay your bank or lender every month until your loan is repaid. Each EMI is made of two parts, interest on the money you still owe and a repayment of the principal. In the early years most of your EMI goes towards interest; as the balance falls, a bigger share goes towards the principal. You can see this shift year by year in the schedule above.
EMI formula
- P = loan amount (principal)
- r = monthly interest rate = annual rate ÷ 12 ÷ 100
- n = number of monthly instalments (tenure in years × 12)
Worked example
For a home loan of ₹10,00,000 at 8.5% a year for 20 years: r = 8.5 ÷ 12 ÷ 100 = 0.007083 and n = 240. The EMI comes to about ₹8,678. Over 240 months you pay about ₹20,82,776, so the total interest is about ₹10,82,776, more than the amount you borrowed.
How to reduce your EMI or total interest
- Choose a longer tenure to lower the EMI, but remember it raises the total interest you pay.
- Make a bigger down payment so you borrow less in the first place.
- Negotiate the rate. Even 0.5% lower makes a large difference on long loans. Try it with the slider above.
- Prepay when you can. Part-prepayments reduce the outstanding principal, which cuts future interest.
- Keep a good credit score, which usually qualifies you for lower interest rates.
Frequently asked questions
What is EMI?
EMI (Equated Monthly Instalment) is the fixed amount you pay your lender every month until a loan is fully repaid. Each EMI covers part of the interest and part of the principal.
What is the EMI on a ₹10 lakh loan for 20 years at 8.5%?
The EMI is about ₹8,678 per month. Over 240 months you pay about ₹20.83 lakh in total, of which about ₹10.83 lakh is interest.
Is my EMI the same every month?
For a fixed-rate loan, yes. For a floating-rate loan the lender may change your EMI or your tenure when interest rates change.
Can I use this for home, car and personal loans?
Yes. The EMI formula is the same for any loan repaid in equal monthly instalments. Only the amount, rate and tenure differ.
Does the EMI include processing fees or insurance?
No. This calculator shows the EMI on the loan amount only. Processing fees, insurance and taxes charged by your lender are extra.
Why is the interest so high on long loans?
Interest is charged every month on the outstanding balance. With a long tenure the balance stays high for longer, so you pay interest on more money for more months.
This calculator is for information only and is not financial advice. Your lender's exact figures may differ slightly because of rounding and fees.