Pay AlertDownload for iPhoneHow EMI is calculated
EMI = P × r × (1 + r)n ÷ ((1 + r)n − 1)
- P is the loan amount.
- r is the monthly interest rate: the yearly rate ÷ 12 ÷ 100.
- n is the number of monthly instalments.
For a ₹10,00,000 loan at 9% a year for 5 years, r is 0.0075 and n is 60. That gives an EMI of about ₹20,758 and total interest of about ₹2,45,501.
Why early EMIs are mostly interest
Interest is charged on the balance you still owe. At the start the balance is highest, so most of each EMI goes to interest. As the balance falls, more of each EMI repays the principal. The year-by-year table above shows this shift.
Ways to pay less interest
- Choose a shorter tenure if the higher EMI is comfortable. The total interest falls sharply.
- Prepay when you can. Extra payments reduce the balance that interest is charged on. For floating-rate loans taken by individuals for non-business purposes, RBI rules do not allow prepayment penalties.
- Never miss an EMI. Bounce charges and penal charges add to the cost of the loan.
An estimate, not an offer
This calculator assumes a fixed rate and equal monthly instalments. Your lender’s figures can differ because of processing fees, interest for the first broken period, insurance or rate changes on floating-rate loans. Check your loan’s key fact statement for exact numbers.
Questions
Is my EMI the same every month?
On a fixed-rate loan, yes. On a floating-rate loan, a rate change can change your EMI or your remaining tenure.
Does a longer tenure reduce my EMI?
Yes, but you pay interest for longer, so the total interest goes up.
Does this calculator include processing fees or GST?
No. It calculates the EMI and interest on the loan amount only.
How do I remember my EMI date?
Add the EMI to Pay Alert with its debit date and turn on Recurring monthly. You will be reminded before each debit.