Loan Calculator
Loan EMI Calculator
Calculate your monthly loan EMI, total interest and total repayment based on the loan amount, interest rate and tenure you enter.
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How It Works
How Is EMI Calculated?
EMI stands for Equated Monthly Instalment. It is calculated using the reducing-balance formula. Each EMI payment covers the interest due on the outstanding balance plus a portion of the principal. As the outstanding balance reduces over time, the interest component of each EMI decreases and the principal component increases.
EMI = P × [r(1+r)n] ÷ [(1+r)n − 1]
How Interest Rate Affects EMI
A higher interest rate increases both the monthly EMI and the total interest payable over the loan tenure. Even a small change in the interest rate can have a meaningful impact on total repayment, particularly for longer-tenure loans. This is because interest compounds on the outstanding balance each month.
How Loan Tenure Affects EMI
A longer tenure reduces the monthly EMI but increases the total interest paid over the life of the loan. A shorter tenure increases the monthly EMI but reduces total interest. The choice of tenure involves a trade-off between monthly cash flow and total cost of borrowing.
EMI vs Total Interest — Why Tenure Matters
Two borrowers with the same loan amount and interest rate but different tenures will pay very different total amounts. The borrower with the longer tenure pays a lower EMI each month but pays significantly more interest in total. Understanding this trade-off helps in making an informed borrowing decision.
Frequently Asked Questions
01What is EMI?
EMI stands for Equated Monthly Instalment. It is the fixed amount a borrower pays to the lender each month until the loan is fully repaid. Each EMI covers the interest due on the outstanding balance and a portion of the principal.
02Does this calculator use reducing-balance or flat-rate interest?
This calculator uses the standard reducing-balance (diminishing balance) method, which is the method used for most bank loans in India including home loans, personal loans and vehicle loans.
03Why does the amortisation schedule show different principal and interest amounts each month?
Because the interest component is calculated on the outstanding balance, which reduces each month as principal is repaid. So the interest portion decreases and the principal portion increases over time, even though the EMI amount stays the same.
04Can I use this for home loans, personal loans and business loans?
Yes. The EMI formula is the same for all reducing-balance loans. Enter the loan amount, interest rate and tenure applicable to your loan.
05Does a lower EMI always mean a cheaper loan?
Not necessarily. A lower EMI may result from a longer loan tenure. A longer tenure means the outstanding balance takes more time to reduce, which increases the total interest paid over the life of the loan. When comparing loan options, consider both the monthly EMI and the total interest payable over the full tenure.
06What does the increased-EMI analysis show?
It shows how paying a higher monthly amount than the standard EMI can reduce the total tenure and total interest paid. It does not include prepayment charges or other lender-specific conditions.