EMI Calculator
Compute the monthly EMI, total interest, and total payment on a reducing-balance loan.
- Principal
- ₹10.00L
- Total interest
- ₹2.75L
Reducing-balance EMI at a constant 10% annual rate — interest is charged on the outstanding balance, which the chart shows declining to zero over the tenure.
Independent · No commissions · No fund-house data — how the numbers are computed
How it works
This calculator computes the equated monthly installment (EMI) on a loan from the amount, annual interest rate and tenure, along with the total interest and total payment over the life of the loan. It uses the reducing-balance method — the standard for bank loans in India — where each month's interest is charged only on the principal still outstanding.
An EMI is a fixed monthly payment that fully repays the loan by the end of the tenure. Early EMIs are mostly interest, because the outstanding balance is large; as the balance falls, an increasing share of the same payment goes to principal. The chart shows this: the outstanding balance declines slowly at first and accelerates toward zero.
Two levers dominate the outcome. Tenure trades monthly affordability against total cost — a longer tenure lowers the EMI but increases total interest, often dramatically. Rate compounds that: at 10% over 5 years, a ₹10 lakh loan costs about ₹2.75 lakh in interest; stretch it to 15 years and the interest roughly triples even though each month feels lighter.
EMI = P · r · (1+r)^n / ((1+r)^n − 1)P is the loan principal, r the monthly interest rate (annual rate ÷ 12 ÷ 100), and n the tenure in months. Total payment = EMI × n; total interest = total payment − P.
Frequently asked questions
How is EMI calculated?
EMI uses the reducing-balance formula EMI = P·r·(1+r)^n / ((1+r)^n − 1), where P is the principal, r the monthly rate (annual rate divided by 12 and 100) and n the number of months. For a ₹10 lakh loan at 10% over 5 years: r = 0.008333, n = 60, giving an EMI of about ₹21,247 — roughly ₹12.75 lakh paid in total, of which ₹2.75 lakh is interest.
Why is most of my early EMI interest?
Because interest is charged each month on the outstanding balance, which is at its largest at the start. On a ₹10 lakh loan at 10%, the first month's interest is ₹8,333 — so of a ₹21,247 EMI only ₹12,914 reduces the principal. As the balance shrinks, the interest portion of the fixed EMI falls and the principal portion rises, which is why the outstanding balance declines slowly early and rapidly near the end.
Does a longer tenure make a loan cheaper?
It makes the EMI smaller but the loan more expensive. Interest accrues on the outstanding balance for longer, so total interest rises with tenure. A ₹10 lakh loan at 10% costs about ₹2.75 lakh in interest over 5 years but around ₹8.1 lakh over 15 years — nearly triple — while the EMI falls from about ₹21,250 to about ₹10,750. Tenure is an affordability lever, not a cost saving.
What happens to my EMI when interest rates change?
On a floating-rate loan, lenders typically keep the EMI unchanged and adjust the tenure when rates move — a rate rise silently extends the loan, a cut shortens it. Borrowers can usually ask for the opposite: a recomputed EMI on the same tenure. On a fixed-rate loan, both EMI and tenure stay put regardless of market rates. This calculator assumes one constant rate for the whole tenure.
Does part-prepayment reduce the EMI or the tenure?
A part-prepayment reduces the outstanding principal immediately, and the lender applies it either as a lower EMI over the same tenure or the same EMI over a shorter tenure — the borrower can usually choose. Keeping the EMI and shortening the tenure saves more total interest, because the balance spends less time accruing it. RBI rules bar prepayment penalties on floating-rate loans to individuals.
Go further
The same math preset for home-loan amounts, rates and tenures.
Preset for car-loan rate ranges and shorter tenures.
Why a quoted flat rate is far costlier than the same reducing rate.
The same exponential arithmetic, working for you instead of the lender.