Worked example
Example with the default numbers — change them above.
Loan amount: ₹10,00,000 · Interest rate (per year): 10% · Loan tenure: 5 yrs
A ₹10 L loan at 10% for 5 yrs has an EMI of ₹21,247, so you repay ₹12.75 L in total, of which ₹2.75 L is interest.
| Monthly EMI | ₹21,247 · for 5 yrs |
|---|---|
| Total interest | ₹2.75 L · 22% of total payout |
| Total payout | ₹12.75 L · principal plus interest |
| Interest in year 1 | 36% · of your EMIs; 5% by year 5 |
How the EMI Calculator works
- Your yearly interest rate is divided by 12 to get the monthly rate the lender actually applies.
- The EMI formula finds the single fixed payment that clears the loan in exactly the number of months you chose.
- Each month, interest is charged on the balance still owed. The rest of that month's EMI repays principal.
- As the balance falls, the interest part of the EMI shrinks and the principal part grows, while the EMI itself stays the same.
- Total interest is every EMI added up minus the amount you borrowed. The last EMI is adjusted by a few rupees so the balance ends at exactly zero.
EMI formula
EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1)
P = loan amount
r = yearly interest rate ÷ 12 ÷ 100 (the monthly rate)
n = number of monthly EMIs (years × 12)
Interest in a month = balance at the start of the month × rAssumptions and limits
- Reducing-balance interest: interest is charged each month on the balance still owed, which is how banks and NBFCs quote most loans.
- The rate stays the same for the whole tenure. A floating-rate loan changes its EMI or tenure when the rate changes; RBI rules let you choose a higher EMI, a longer tenure or both when your lender resets the rate.
- The first EMI falls one month after disbursal and every EMI is paid on time. Lenders charge interest from the day the money is disbursed, so if your first EMI is more than a month away you pay the extra days' interest separately, and some lenders work out interest daily, so their schedule can differ slightly.
- EMIs are rounded to the nearest rupee and the last EMI is adjusted. Your lender's statement can differ by a few rupees.
- Processing fees, insurance and other charges are not included unless the calculator has a field for them.
Frequently asked questions
How is EMI calculated?
EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where P is the loan, r the monthly rate (yearly rate ÷ 12 ÷ 100) and n the number of months. For a ₹10 lakh loan at 10% for 5 years, the EMI is ₹21,247 and the total interest is about ₹2.75 lakh. The calculator does this for you and shows the full schedule.
Does a longer tenure always lower my EMI?
Yes, a longer tenure lowers the EMI, but it raises the total interest sharply. On a ₹50 lakh loan at 8.5%, a 20-year tenure gives an EMI of ₹43,391 and about ₹54.14 lakh of interest. At 30 years the EMI drops to ₹38,446, but interest climbs to about ₹88.40 lakh.
Why is most of my early EMI interest?
Interest is charged on the outstanding balance, and the balance is largest at the start. On a ₹50 lakh loan at 8.5% over 20 years, the first EMI of ₹43,391 has about ₹35,417 of interest and only ₹7,974 of principal. Over time the balance falls, so the principal part grows and the interest part shrinks.
What is the difference between a flat rate and a reducing-balance rate?
A flat rate charges interest on the full original loan for the whole tenure, even as you repay it. A reducing-balance rate charges interest only on what you still owe. For the same quoted percentage, a flat rate costs far more. This calculator uses reducing-balance interest, so convert any flat-rate quote before comparing offers.
Can I pay less interest by prepaying my loan?
Yes. A part payment goes straight to principal, so every later month's interest is charged on a smaller balance. The earlier you prepay, the more you save. Many lenders let you either keep the EMI and finish sooner or lower the EMI; ask yours which it offers. Try both in the loan prepayment calculator to see the interest and months saved.
Does this EMI include processing fees and insurance?
No. The EMI covers only repayment of the loan and its interest. Processing fees, loan insurance, stamp duty and GST on fees are usually paid separately or sometimes added to the loan by the lender. Ask your lender for the full list of charges and the annual percentage cost before you sign.
Sources
- RBI (Pre-payment Charges on Loans) Directions, 2025 – no charges on floating-rate loans to individuals sanctioned or renewed from 1 Jan 2026
- RBI: reset of floating interest rate on EMI-based personal loans (your choice of higher EMI or longer tenure)
Logic and rates last verified on .
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Guides that go deeper
See worked examples
Interest saved and months cut by prepaying ₹1 lakh to ₹25 lakh on ₹30 lakh to ₹1.5 crore home loans.
- How much do you save by prepaying ₹1 lakh on a ₹30 lakh home loan? — Saves ₹3.34 L, 1 yr 4 mo sooner
- How much do you save by prepaying ₹3 lakh on a ₹30 lakh home loan? — Saves ₹8.74 L, 3 yrs 9 mo sooner
- How much do you save by prepaying ₹5 lakh on a ₹30 lakh home loan? — Saves ₹12.9 L, 5 yrs 8 mo sooner