How to use the EMI Calculator
- Enter the loan amount you plan to borrow, or drag the slider.
- Enter the annual interest rate offered by your bank or NBFC.
- Choose the tenure in years or months.
- Read your monthly EMI, total interest and total payment on the right. Open the year-wise schedule to see how the balance falls each year.
Formula
EMI = P × r × (1 + r)ⁿ ÷ [(1 + r)ⁿ − 1]
- P = loan amount (principal)
- r = monthly interest rate = annual rate ÷ 12 ÷ 100
- n = number of monthly instalments (tenure in months)
Worked example: ₹10 lakh home loan at 10% for 20 years
P = ₹10,00,000, r = 10 ÷ 12 ÷ 100 = 0.008333 and n = 20 × 12 = 240 months.
Putting these into the formula gives an EMI of about ₹9,650. Over 240 months you pay ₹23,16,052 in total, of which ₹13,16,052 is interest – more than the loan itself.
Cutting the tenure to 15 years raises the EMI to about ₹10,746 but saves more than ₹3.8 lakh of interest.
How a reducing-balance EMI works
Banks in India calculate EMIs on a reducing balance. Each month, interest is charged only on the amount still outstanding. In the early years most of your EMI goes towards interest; as the balance falls, a larger share repays the principal. The year-wise schedule above shows this shift clearly.
Tips to reduce your EMI burden
Small changes can save lakhs over the life of a loan:
- Make a larger down payment to borrow less.
- Compare interest rates across lenders – even 0.5% lower makes a big difference on long loans.
- Prepay whenever you get a bonus. For floating-rate loans taken by individuals, RBI rules do not allow banks to charge a prepayment penalty.
- Choose the shortest tenure whose EMI you can comfortably afford – ideally keep total EMIs below 40% of your take-home pay.