Loan EMI calculator

What an EMI is

An equated monthly instalment (EMI) is the fixed amount a borrower pays every month until the loan is repaid. Each EMI has two parts: interest on the balance still outstanding, and a repayment of principal. In the early years most of the EMI goes to interest. As the balance falls, the principal part grows.

How to use this calculator

1. Enter the loan amount in ₹ lakh.
2. Enter the interest rate as a yearly percentage.
3. Enter the tenure in years.

You will see the EMI, the total interest over the life of the loan and the split between principal and interest.

The formula

EMI = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)

Here P is the loan amount, r is the monthly interest rate (the yearly rate divided by 12, as a decimal) and n is the number of monthly instalments.

Worked example

A loan of ₹25 lakh at 9.5% a year for 15 years has 180 monthly instalments.

• EMI: about ₹26,106 a month
• Total amount payable: about ₹46.99 lakh
• Total interest: about ₹21.99 lakh

Tenure makes a big difference. The same loan over 10 years has an EMI of about ₹32,349 but total interest of only about ₹13.82 lakh. Over 20 years the EMI drops to about ₹23,303, while total interest rises to about ₹30.93 lakh.

How banks use the EMI in a credit decision

For loans to individuals, a credit manager checks whether the borrower's income can carry the new EMI along with existing ones. This is often measured as FOIR (fixed obligations to income ratio): all EMIs as a share of net monthly income. The acceptable level depends on the lender, the income level and the type of loan.

For business loans, the EMI feeds into the repayment schedule that drives the DSCR calculation. If cash accruals don't cover the instalments comfortably, a longer tenure or a smaller loan is usually the answer.

Frequently asked questions

Is the interest on a loan calculated on the full amount for the whole tenure? No. On a standard EMI loan, interest is charged on the reducing balance, which is why the interest part of the EMI falls over time.

Does a part-prepayment reduce the EMI or the tenure? It depends on the lender. Most let you choose either. Reducing the tenure usually saves more interest.

Why is my bank's EMI slightly different? Banks may round differently, charge interest from the disbursement date, or add a broken-period interest for the first month.