Mera Hisab
What is EMI?
EMI (Equated Monthly Instalment) is the fixed amount you pay the bank every month until your loan is fully repaid. Each EMI has two parts: interest on the balance still outstanding, and a portion of the principal. In the early years most of your EMI goes towards interest; in the later years most of it reduces the principal. Open the year-by-year schedule above to see this for your own loan.
How is EMI calculated?
Banks use the reducing-balance formula:
EMI = P × r × (1 + r)n ÷ ((1 + r)n − 1)
- P = loan amount
- r = monthly interest rate (annual rate ÷ 12 ÷ 100)
- n = number of monthly instalments
For an annual rate of 9%, r = 9 ÷ 12 ÷ 100 = 0.0075.
Examples: EMI on ₹5 lakh and ₹10 lakh loans
| Loan | Rate | Tenure | Monthly EMI | Total interest | Total payment |
|---|---|---|---|---|---|
| ₹5 lakh | 9% | 5 years | ₹10,379 | ₹1,22,751 | ₹6,22,751 |
| ₹10 lakh | 9% | 5 years | ₹20,758 | ₹2,45,501 | ₹12,45,501 |
| ₹10 lakh | 9% | 10 years | ₹12,668 | ₹5,20,109 | ₹15,20,109 |
Stretching a ₹10 lakh loan from 5 to 10 years cuts the EMI by about ₹8,000, but the total interest more than doubles.
How the interest rate changes the EMI
For a ₹10 lakh loan over 10 years:
| Interest rate | Monthly EMI | Total interest |
|---|---|---|
| 8% | ₹12,133 | ₹4,55,931 |
| 9% | ₹12,668 | ₹5,20,109 |
| 10% | ₹13,215 | ₹5,85,809 |
| 11% | ₹13,775 | ₹6,53,000 |
A difference of just 1% changes the total interest on this loan by about ₹65,000, so compare offers from a few banks before you sign.
Tips to pay less interest
- Prepay when you can. An extra payment reduces the principal directly, so every future month's interest falls. RBI rules do not allow banks to charge prepayment penalties on floating-rate loans taken by individuals for non-business purposes; fixed-rate loans may carry a charge, so check your loan agreement.
- Choose the shortest tenure you can comfortably afford. A slightly higher EMI can save lakhs in interest on a long home loan.
- Keep your total EMIs within your budget. Lenders generally prefer your EMIs to stay within 40–50% of your monthly take-home income.
- Count the extra costs. Processing fees and loan insurance add to the real cost of a loan.
This calculator uses the standard reducing-balance method. Your bank's EMI may differ by a few rupees because of rounding or interest for the first broken month.
Frequently asked questions
Can I use this calculator for home, car and personal loans?
Yes. Home, car, two-wheeler, personal and education loans all use the same reducing-balance formula. Enter the loan amount, the interest rate and the tenure given by your lender.
Why does most of my early EMI go towards interest?
Interest is charged on the outstanding balance, which is highest at the start of the loan. As you repay the principal, the interest part of each EMI shrinks and the principal part grows.
Is a longer tenure better?
A longer tenure gives a lower EMI but a much higher total interest. Choose the shortest tenure whose EMI fits comfortably in your monthly budget.
Will my EMI change if the interest rate changes?
On a floating-rate loan, the bank adjusts either the EMI or the remaining tenure when its lending rate changes. Ask your bank which option applies to your loan; you can usually request the one you prefer.
Is the information I enter saved anywhere?
No. The calculation happens entirely in your browser. Nothing you enter is sent to our server or stored.