What is EMI?

EMI (Equated Monthly Installment) is the fixed monthly amount you pay to repay a loan. It consists of two parts: principal repayment and interest. In the early months, most of your EMI goes toward interest. Over time, more goes toward principal.

EMI 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 = Tenure in months

Example: Home Loan of ₹50 Lakhs

  • Loan: ₹50,00,000
  • Rate: 8.5% p.a.
  • Tenure: 20 years
  • Monthly EMI: ₹43,391
  • Total Interest Paid: ₹54.1 Lakhs
  • Total Amount: ₹1.04 Crore

Use our EMI Calculator to instantly calculate for any loan amount.

How to Reduce Your EMI

  • Bigger down payment → lower principal → lower EMI
  • Longer tenure → lower EMI but more total interest
  • Negotiate rate → even 0.5% less saves lakhs over 20 years
  • Prepay when possible → reduces outstanding principal → reduces future interest

EMI Types: Flat Rate vs Reducing Balance

Always ask your bank: Is this a flat rate or reducing balance rate?

  • Reducing balance: Interest on outstanding principal. Better for you. Standard in India.
  • Flat rate: Interest on original principal throughout. Actual effective rate is ~1.8× the stated rate.

Calculate Your Loan Eligibility

Most banks allow EMI up to 40–50% of your monthly income. Use the Loan Affordability Calculator to find your maximum eligible loan.