Loan EMI Calculator

Understanding Loan EMIs

What is EMI?

EMI (Equated Monthly Installment) is a fixed payment amount made by a borrower to a lender each month until the loan is fully repaid. Each EMI payment includes both principal and interest components.

EMI Calculation Formula

EMI = [P × r × (1+r)^n] ÷ [(1+r)^n-1]
Where:
P = Principal loan amount
r = Monthly interest rate (annual rate ÷ 12 ÷ 100)
n = Loan tenure in months

Example Calculation

For ₹5,00,000 loan at 8.5% for 10 years (120 months):
Monthly rate (r) = 8.5 ÷ 12 ÷ 100 = 0.007083
EMI = [500000 × 0.007083 × (1+0.007083)^120] ÷ [(1+0.007083)^120-1]
≈ ₹6,198 per month

Amortization Schedule Basics

• Initial payments have higher interest component
• Principal portion increases with each payment
• Total interest paid = (EMI × n) - Principal
• Shorter tenure = Higher EMI but less total interest

Factors Affecting EMI

• Loan Amount: Directly proportional to EMI
• Interest Rate: Lower rates reduce EMI
• Tenure: Longer tenure reduces EMI but increases total interest