EMI = Equated Monthly Installment. Fixed amount har mahine dena hota hai (Principal + Interest).

EMI Formula

EMI = P × r × (1+r)^n / ((1+r)^n – 1)

P=Principal, r=Monthly Interest Rate, n=Tenure in Months

Example

₹10L @ 9% p.a. for 5 years → ~₹20,758/month. Calculate instantly with EMI Calculator.

Types

  • Home Loan EMI
  • Car Loan EMI
  • Personal Loan EMI

Worked example — tested on the live EMI Calculator

I tested this on TooliFyra's EMI Calculator with a loan of ₹50,00,000 at 9% per year for 60 months (5 years). The tool gives an EMI of about ₹1.04 lakh per month, a total payment of about ₹62.28 lakh and total interest of about ₹12.28 lakh. In other words, the interest alone is almost a quarter of the amount borrowed. The tool's year-by-year table shows the same pattern: in Year 1, you pay about ₹4.16 lakh in interest, because the balance is highest at the start.

For a smaller loan, the same rate and tenure scale down in proportion: ₹10 lakh at 9% for 5 years gives about ₹20,758 a month, as shown in the example above.

What the formula means in plain words

Start with the monthly rate, r. A 9% annual rate is 0.09 ÷ 12 = 0.0075 a month — not 9% a month. The formula then spreads the loan so that the same payment each month covers that month's interest and pays off a little of the principal. Early on, most of your EMI is interest, because the outstanding balance is large; later, most of it is principal. That is why the EMI stays the same even though the interest part keeps shrinking.

What changes your EMI

  • Principal: borrow twice as much at the same rate and tenure, and the EMI roughly doubles.
  • Interest rate: a higher rate raises the EMI and, more importantly, raises the total interest you pay over the loan.
  • Tenure: a longer tenure lowers the monthly EMI, but you pay interest for more months, so the total interest goes up. A shorter tenure does the opposite: a higher EMI, but less total interest.

Common mistakes

  • Using the annual rate (9%) as the monthly rate — that would make the EMI far too high.
  • Comparing loans by EMI alone. Two loans can have similar EMIs and very different total interest if their tenures differ.
  • Forgetting charges the EMI does not include, such as processing fees, insurance or late-payment charges.
  • Assuming the EMI will fall if you make a part-payment. It can reduce the tenure or the EMI, depending on the lender's terms — check before you pay extra.

The formula above assumes a fixed interest rate, monthly payments and no part-payments. If your loan has a floating rate, the EMI or the tenure will change when the rate changes.