EMI Calculator

EMI equals P times r times (1 plus r) to the power n divided by ((1 plus r) to the power n minus 1), where P is the loan principal, r is the monthly interest rate (annual rate divided by 12 divided by 100), and n is the total number of monthly instalments. For a ₹20,00,000 home loan at 8.5 percent per year over 20 years, the EMI works out to about ₹17,356 per month. Values shown here are illustrative for learning, not a loan offer.

Tenure has the biggest effect on the monthly outflow, but interest rate has the biggest effect on total interest paid. Doubling the tenure can cut the EMI by 30 to 40 percent but nearly double the total interest. Try sliding the tenure first to see comfort, then tighten the rate to see the lifetime cost.

When r is 0 the standard EMI formula divides by zero, so the calculator falls back to simple division: EMI equals P divided by n. A ₹1,20,000 zero-interest consumer loan over 12 months is just ₹10,000 per month. Most no-cost EMI offers work this way after the merchant absorbs the interest behind the scenes.

EMI is a fixed monthly amount that covers both interest and a slice of principal, so the loan ends on schedule. An interest-only payment only services the interest, leaving the full principal due at the end as a bullet payment. EMIs feel larger month-to-month but actually close the loan; interest-only is cheaper monthly but riskier.

By default most Indian banks keep the EMI the same and shorten the tenure when you prepay, which saves the most interest. You can usually request the opposite : keep tenure, reduce EMI : but you will pay more interest overall. Run both scenarios in the calculator to see the gap before deciding.

In the first year of a 20-year home loan, roughly 80 to 90 percent of each EMI goes to interest and only 10 to 20 percent reduces the principal. As the outstanding balance shrinks, the interest component shrinks too and the principal share grows. By the last few years, almost the entire EMI is principal.