What is an EMI?
EMI stands for equated monthly instalment. It is the fixed amount you pay each month on a loan until it is fully repaid. Each payment covers some interest and some principal. At the start most of the payment is interest. Over time more of it goes to the principal.
The formula
EMI = P × r × (1 + r)n ÷ ((1 + r)n − 1)
- P is the loan amount.
- r is the monthly interest rate: the annual rate divided by 12 and by 100.
- n is the number of monthly payments.
Worked example
A loan of 100,000 at 10% a year for 12 months has r = 0.10 ÷ 12 = 0.008333. The EMI works out to about 8,791.59. Over 12 payments you pay 105,499.06 in total, so the interest cost is about 5,499.
How to lower your EMI
- Borrow less by increasing your down payment.
- Choose a longer term. The EMI falls, but total interest rises.
- Compare interest rates from several lenders. Even a small difference adds up over years.
- Make part-prepayments if the lender allows them without a penalty.
Things this calculator does not include
Processing fees, insurance, late charges and variable-rate changes are not included. Real lenders may also round figures differently, so treat the result as a close estimate and confirm exact numbers with your lender.
Frequently asked questions
Does a 0% interest rate work?
Yes. The loan is simply split into equal payments.
Can I use this for a car, home or personal loan?
Yes, for any loan with fixed monthly payments and a fixed rate. Use your own currency.