EMI or Equated Monthly Installment is the fixed amount you pay every month to the bank or lender when you take a loan. Whether it's a home loan, car loan, personal loan, or any other credit, the EMI calculation determines how much you need to pay monthly and how much total interest you'll pay over the loan tenure. Understanding EMI helps you choose the right loan amount, tenure, and lender for your budget.
For FY 2025-26, EMI is calculated using a formula that considers loan principal amount, annual interest rate, and loan tenure in months. The formula balances your monthly payment so you pay both principal and interest together. Initially, your EMI goes more towards interest payment, but as time progresses, more of it goes towards principal repayment. Interest rates vary based on loan type - home loans are around 8-9%, car loans 9-11%, personal loans 12-18% depending on credit score.
Our EMI calculator helps you see the complete picture before committing to a loan. You can experiment with different loan amounts, interest rates, and tenures to find what suits your monthly budget. You'll also see the total interest you'll pay over the loan period - often this surprises people because a ₹20 lakh home loan at 9% for 20 years means paying ₹20 lakh in interest alone. Tools like pre-payment calculator help you see how paying extra can reduce interest burden significantly.
When planning to take a loan, check your loan eligibility first to see how much banks are willing to lend based on your income and expenses. Remember, your EMI should ideally be not more than 40-50% of your monthly income for comfortable living. After getting pre-approved loan amount from eligibility calculator, use EMI calculator to see if you can afford the monthly payments without straining your finances.
Below is a simple EMI calculation example to help you understand how monthly EMI, total interest, and total loan repayment are calculated for a typical home loan in India. Similar logic applies to car loans, personal loans, and education loans.
| Loan Amount | Interest Rate | Tenure | Monthly EMI | Total Interest |
|---|---|---|---|---|
| ₹20,00,000 | 9% p.a. | 20 years | ₹17,996 | ₹23.2 lakh |
This example clearly shows how a longer loan tenure increases total interest payable, even if the monthly EMI appears affordable. Always compare EMI along with total interest cost before finalising any loan.
Input the loan amount, annual interest rate, and tenure in years. Make sure all values are positive numbers.
If you plan to make prepayments, enter the amount and the month when you'll make the payment for savings analysis.
Press "Calculate EMI" to get instant results with detailed breakdown, charts, and prepayment analysis.
Check the monthly EMI amount, total interest, total payment, and loan tenure in the summary cards.
View the pie chart for payment breakdown, bar chart for interest rate impact, and line chart for EMI schedule.
Try different interest rates and tenures to find the best loan option that fits your budget and requirements.
While using an EMI calculator is essential, many borrowers still make costly mistakes while choosing loan amount, tenure, or interest rate. Avoiding the following common EMI mistakes can help you save significant interest and maintain long-term financial stability.
1. Choosing a longer tenure only to reduce EMI: A lower EMI may look attractive, but longer tenures drastically increase total interest paid.
2. Ignoring total interest payable: Always check the total interest amount, not just the monthly EMI, before finalising the loan.
3. Taking EMI close to maximum eligibility: Banks may allow EMIs up to 50% of income, but a safer limit is around 40% to manage expenses comfortably.
4. Not planning prepayments in advance: Small annual prepayments can reduce loan tenure and save lakhs in interest over time.
5. Ignoring floating interest rate risk: For floating-rate loans, EMIs may increase when interest rates rise. Keep a buffer in your budget.
6. Overlooking processing fees and hidden charges: Processing fees, insurance premiums, and administrative charges increase the effective loan cost.
Use this EMI calculator along with a prepayment calculator and loan eligibility calculator to avoid these mistakes and choose the most affordable loan option.
EMI is calculated using the formula: EMI = [P × R × (1+R)^N] / [(1+R)^N - 1], where P is the principal amount, R is the monthly interest rate (annual rate ÷ 12), and N is the loan tenure in months. This ensures equal monthly payments throughout the loan period.
The main factors that affect EMI are:
Shorter tenure: Higher EMI but lower total interest paid. Choose if you can afford higher monthly payments. Longer tenure: Lower EMI but higher total interest. Choose if you need lower monthly payments but can afford the extra interest over time. Consider your monthly cash flow and financial goals.
Prepayment reduces the outstanding principal amount, which directly reduces the interest component of future EMIs. You can either reduce the EMI amount (keeping the same tenure) or reduce the tenure (keeping the same EMI). Both options result in significant interest savings over the loan period.