Find your monthly EMI for any loan — home, car or personal. Enter the loan amount, interest rate and time period. You will see your EMI, the total interest you will pay, and a month-by-month payment plan.
The yearly interest rate is changed to a monthly rate by dividing by 12.
The loan period in years is changed into the total number of months.
A standard formula is used to work out one fixed EMI amount.
Each month, interest is charged first on what you still owe. The rest of the EMI reduces your loan. This is why your early EMIs are mostly interest.
EMI: P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)
P: Principal loan amount
r: Monthly interest rate = annual rate ÷ 12 ÷ 100
n: Total number of monthly instalments
What does EMI stand for?
EMI means Equated Monthly Instalment. It is a fixed amount you pay every month. It covers both interest and part of your loan, so the loan is fully paid off by the end.
Why is most of my early EMI going towards interest?
Interest is charged on the amount you still owe, which is highest at the start. As you pay off the loan, the interest part gets smaller, so more of each EMI goes towards your loan amount.
Does prepaying a loan reduce the interest?
Yes. When you prepay, your loan amount goes down. So all future interest is worked out on a smaller amount. Prepaying early in your loan saves much more than prepaying near the end.
Is this EMI the exact amount my bank will charge?
This uses the same method banks use. Your real EMI might be a little different because of processing fees, insurance, or how your bank counts days. Treat this as a close estimate.