How is EMI calculated?

EMI is calculated using the formula: EMI = P × r × (1+r)^n / ((1+r)^n − 1), where P is the loan amount, r is the monthly interest rate, and n is the tenure in months. Most installment loans use a reducing-balance approach.

Does making a prepayment reduce my EMI or Tenure?

By default, a prepayment reduces your loan tenure, which saves you the maximum amount of interest. However, you can request your bank to keep the tenure same and reduce your monthly EMI instead if you need better cash flow.

What is a reducing interest rate vs flat rate?

In a reducing rate, interest is calculated on the remaining principal every month. In a flat rate, interest is calculated on the original loan amount for the entire tenure. Reducing rates are almost always cheaper for the borrower.

EMI Calculator

Calculate monthly instalments for home loans, car loans, or personal loans with optional currency switching.

Asset Value / Total Cost

₹

Please enter a valid amount

Down Payment (Optional)

₹

Annual Interest Rate

Loan Tenure

EMI Structure

No-Cost EMI

Explore Presets

Monthly EMI
₹0

Total Payment

₹0

Principal + all interest over full tenure

Total Interest

₹0

Total cost of borrowing — minimise this by prepaying

Reality Check

Actionable Suggestions

Formula: EMI = P × r × (1+r)^n / ((1+r)^n - 1) where r = monthly rate, n = months. Early EMIs are mostly interest; as time goes on, more goes to principal (amortisation).

You might also need

Amortisation Year by Year

Principal

Interest

EMI formula

EMI = P × r × (1+r)^n / ((1+r)^n - 1), where P is loan amount, r is monthly interest rate (annual rate ÷ 12), and n is total months. This formula spreads principal plus total interest across the full term, which is why early payments are mostly interest and later payments are mostly principal.

Why tenure changes everything

A longer loan term lowers the monthly payment, but it also gives interest more time to accumulate. That trade-off can make a loan feel affordable in the short term while becoming much more expensive over its full life.

How to reduce total borrowing cost

The most powerful levers are a larger down payment, a shorter tenure that still fits your cash flow, and prepayments made early in the schedule. Small changes near the start of a loan usually have a much bigger effect than the same changes made later.