Formula
EMI = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)total payable = EMI × ntotal interest = total payable − P
- P — loan amount (principal)
- r — monthly interest rate = annual rate ÷ 12 ÷ 100
- n — number of monthly instalments
The EMI is the fixed amount that, paid every month, exactly repays the loan with interest on the reducing balance.
Worked example
10,00,000 at 8.5% for 20 years
- Loan amount
- 1,000,000
- Interest rate per year
- 8.5 %
- Loan tenure
- 20
- Tenure in
- Years
- Currency symbol
- ₹ Rupee (INR)
Monthly EMI
₹8,678.23
Total interest: ₹10,82,775.20
Total amount payable: ₹20,82,775.20
Interest as a share of total: 52%
How it works
A loan of 10,00,000 at 8.5% a year for 20 years has r = 0.085 ÷ 12 and n = 240, giving an EMI of 8,678.23. Over 240 months that is 20,82,775.20 paid, of which 10,82,775.20 is interest. Early instalments are mostly interest and later ones mostly principal — the year-by-year table shows the shift.
This is the reducing-balance method with monthly compounding that banks use for home, car and personal loans. Lenders round the EMI differently and usually adjust the last instalment by a few paise, so your sanction letter may differ slightly. Processing fees, insurance and any change in a floating rate are not included. For the full month-by-month table and the effect of prepaying, use the Amortization Schedule Calculator; if you only know the EMI and want the rate, use the Loan Interest Rate Calculator.
To see how a monthly saving could offset a loan over time, try the SIP Calculator.
Assumptions and limits
- Fixed rate, equal monthly instalments, paid at the end of each month.
- Fees, insurance, taxes and prepayment charges are excluded.