How EMI is calculated
EMI = P × r × (1 + r)n ÷ ((1 + r)n − 1), where P is the loan amount, r is the monthly interest rate (yearly rate ÷ 12 ÷ 100) and n is the number of months. Early EMIs are mostly interest; later ones are mostly principal — the year-wise table shows this shift.
Tips
- A small drop in rate matters a lot on long loans: on a ₹25 lakh, 20-year loan, 0.5% less saves roughly ₹1.8 lakh in interest.
- Shorter tenure means higher EMI but far less total interest. Try 15 vs 20 years.
- Banks also charge processing fees and insurance; those are not in this EMI.
Common questions
Is this the same formula banks use?
Yes, for standard reducing-balance loans (home, car, personal). Flat-rate loans from some lenders cost more than the EMI suggests.
Does a floating rate change my EMI?
Usually the bank keeps the EMI and changes the tenure. Re-run the calculator with the new rate to see the new tenure or EMI.