What is an EMI?
An Equated Monthly Instalment (EMI) is the fixed amount you pay a lender every month until a loan is fully repaid. Each EMI stays the same for the life of the loan, but its make-up changes: a part goes toward interest on the outstanding balance and the rest reduces the principal you borrowed.
Because the interest is charged on a reducing balance, early instalments are mostly interest and later ones are mostly principal — even though the total EMI never moves.
The EMI formula
EMI = P × r × (1 + r)n / [ (1 + r)n − 1 ]
- P — the principal (loan amount)
- r — the monthly interest rate (annual rate ÷ 12 ÷ 100)
- n — the number of monthly instalments (tenure in months)
Worked example
Borrow ₹20,00,000 at 9% per year for 15 years (180 months). The monthly rate is 0.75%. The EMI works out to about ₹20,285. Over 15 years you repay roughly ₹36.5 lakh — so about ₹16.5 lakh of that is interest.
Why early EMIs are interest-heavy
Interest each month is charged on whatever principal is still outstanding. At the start, the balance is large, so interest eats most of the EMI. As the balance shrinks, the interest portion falls and more of every payment goes to principal. This is exactly what the amortization schedule in the calculator shows.
What moves your EMI
Loan amount
A bigger principal means a proportionally bigger EMI.
Interest rate
Even a 1% change noticeably shifts both EMI and total interest.
Tenure
A longer tenure lowers the EMI but increases total interest paid.
The tenure trade-off
Stretching a loan over more years makes the monthly payment easier to afford, but you pay interest for longer. A shorter tenure costs more each month yet saves a large amount overall. Use the tenure toggle to compare a few options and find a payment you can comfortably sustain without overpaying on interest.
Prepayment: the interest saver
Because interest is charged on the outstanding balance, paying extra toward principal — a lump-sum prepayment or a higher EMI — cuts the balance sooner and reduces all the future interest that balance would have generated. Even modest, regular prepayments can shave years off a long loan.
Things the calculator doesn't include
- Processing fees and charges that lenders add at disbursal.
- Insurance premiums sometimes bundled with the loan.
- Floating rates — if your rate changes, the EMI or tenure will be revised.
- Minor rounding differences between lenders. Treat the output as a close estimate.
Work out your EMI
Enter your loan amount, interest rate, and tenure to see your monthly EMI, total interest, and a full year-by-year amortization schedule.
Open the EMI Calculator →