Learn everything about EMI calculation, EMI formula, real examples, and smart tips to reduce your loan EMI. A complete guide for Indian borrowers.
EMI, or Equated Monthly Installment, is the fixed amount a borrower pays every month to repay a loan. EMI includes two components: the principal (the actual loan amount) and the interest charged by the lender.
Whether you take a home loan, personal loan, car loan, or education loan, EMI helps you repay the loan in a structured and predictable manner. In India, EMIs are usually paid monthly and remain constant throughout the loan tenure, unless the interest rate changes.
Calculating EMI before taking a loan is extremely important. Many borrowers focus only on loan amount approval and ignore monthly affordability. This often leads to financial stress later.
EMI = [P × R × (1 + R)^N] / [(1 + R)^N − 1]
Where:
This formula is universally used by banks and financial institutions in India. Manual calculation can be complicated, which is why online EMI calculators are preferred.
Let’s understand EMI calculation with a simple example:
Monthly interest rate = 9 ÷ 12 ÷ 100 = 0.0075
Using the EMI formula, the EMI comes to approximately ₹8,997. Over 20 years, the total interest paid will be significantly higher than the principal.
Higher loan amount results in higher EMI. Always borrow only what you need.
Even a small change in interest rate can significantly affect EMI and total interest.
Longer tenure reduces EMI but increases total interest paid. Shorter tenure increases EMI but saves interest.
Choosing the right loan tenure is a balance between EMI affordability and total interest cost.
Financial experts suggest choosing the shortest tenure you can comfortably afford. You can later reduce interest burden further through prepayments.
👉 Try our EMI Calculator to calculate EMI instantly.
Planning a housing loan? Try our Home Loan EMI Calculator.
EMI calculation is the foundation of smart borrowing. Before taking any loan, always calculate EMI and ensure it fits comfortably within your monthly budget.
Our EMI Calculator is designed for Indian borrowers to help you make informed and confident financial decisions.