EMI Calculation Formula: How to Calculate Home, Car and Personal Loan EMI
Updated 2026-10-26 · 4 min read
EMI (Equated Monthly Instalment) is the fixed amount you pay every month to repay a loan. Part of each EMI pays the interest and the rest reduces the loan amount.
Before you take a home, car or personal loan, it helps to know your EMI and how much interest you will pay in total. This guide shows the formula, a worked example, and how to use the free EMI Calculator.
Calculate your EMI now — EMI / Loan Calculator
Step by step
- Enter the loan amount Type the amount you will borrow in Loan amount, for example 1000000 for ₹10 lakh.
- Enter the interest rate Type the yearly interest rate in 'Interest rate (% per year)', for example 8.5.
- Enter the tenure Type the loan period in years in 'Tenure (years)'. Half years like 2.5 are allowed.
- Read the results You see the Monthly EMI, Total interest and Total payment, plus a bar showing how much of what you pay is principal and how much is interest.
- Check the yearly schedule The table shows the principal paid, interest paid and balance left for each year. Press 'Show all' to see every year.
The EMI formula
EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1)
P is the loan amount. r is the monthly interest rate, which is the yearly rate ÷ 12 ÷ 100. n is the number of monthly instalments, which is years × 12.
Worked example: ₹10 lakh at 8.5% for 10 years
- P = 10,00,000
- r = 8.5 ÷ 12 ÷ 100 = 0.0070833
- n = 10 × 12 = 120
- (1 + r)^n = 1.0070833^120 ≈ 2.3326
- EMI = 10,00,000 × 0.0070833 × 2.3326 ÷ (2.3326 − 1) ≈ ₹12,399 per month
- Total payment = 12,398.57 × 120 ≈ ₹14,87,828, so total interest ≈ ₹4,87,828
More examples
These examples are only for illustration. Your bank's rate depends on the lender, your credit profile and the loan type.
| Loan | Rate | Tenure | EMI (approx.) | Total interest (approx.) |
|---|---|---|---|---|
| ₹25,00,000 (home) | 8.5% | 20 years | ₹21,696 | ₹27,06,939 |
| ₹8,00,000 (car) | 9% | 5 years | ₹16,607 | ₹1,96,401 |
| ₹5,00,000 (personal) | 10% | 5 years | ₹10,624 | ₹1,37,411 |
Tips before you take a loan
- A longer tenure lowers the EMI but increases the total interest a lot. Compare both numbers.
- Ask about processing fees, insurance and prepayment charges. They are not part of the EMI formula.
- Floating-rate loans can change when rates change, which changes your EMI or tenure.
- Early EMIs are mostly interest. Prepaying in the first few years saves the most interest.
Questions
Why is my bank EMI slightly different?
Banks may round differently, count interest from the disbursement date, or add fees and insurance. Use the calculator as a close estimate and confirm with your lender.
Does a lower EMI mean a cheaper loan?
Not always. A lower EMI from a longer tenure usually means more total interest. Compare the total payment.
How is the interest rate converted to a monthly rate?
Divide the yearly rate by 12 and by 100. For 8.5% a year, r = 8.5 ÷ 12 ÷ 100 = 0.0070833.
Is this financial advice?
No. The calculator only does the maths. For choosing a loan, talk to your bank or a qualified advisor.
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