EMI Calculator

What is an EMI? (Equated Monthly Installment Meaning & Components)

An EMI— Equated Monthly Installment — is the fixed sum you pay a lender on the same date each month until a loan is cleared. "Equated" is the important word: the amount never changes over the term, which is what makes a loan budgetable. What does change, month by month, is what that fixed sum is actually buying.

Every instalment splits into two parts. The interest componentis the lender's charge for the month, calculated on whatever principal is still outstanding. The principal componentis whatever is left of the EMI after that charge, and it is the only part that reduces your debt. Because the outstanding balance falls a little each month, next month's interest charge is smaller, so a larger slice of the same EMI goes to principal. The split tilts steadily from interest toward principal across the life of the loan.

The consequence surprises most first-time borrowers. On a ₹10,00,000 loan at 10.5% over five years, the EMI is ₹21,494 throughout — but ₹97,421 of the first year's payments is interest, against just ₹14,090 in the fifth. Early instalments are mostly rent on the money; later ones are mostly repayment. That is why the year-by-year schedule in the calculator above is worth reading rather than skipping, and why prepaying early saves so much more than prepaying late.

How to Calculate EMI: Formula & Reducing Balance Method

Every Indian bank uses the same closed-form expression to answer how to calculate EMI:

EMI = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)

• •P — the principal, meaning the amount sanctioned, before any processing fee is deducted.
• •r — the monthly interest rate, not the annual one: divide the annual rate by 12, then by 100. A 10.5% loan gives r = 10.5 ÷ 12 ÷ 100 = 0.00875.
• •n — the tenure in months, not years. Five years is n = 60.

Worked Example: ₹10,00,000 at 10.5% for 5 Years

Take it one step at a time rather than in one pass:

1. 1.Convert the rate. r = 10.5 ÷ 12 ÷ 100 = 0.00875 per month.
2. 2.Convert the tenure. n = 5 × 12 = 60 months.
3. 3.Compute the growth factor. (1 + 0.00875)⁶⁰ = 1.686603.
4. 4.Numerator: 10,00,000 × 0.00875 × 1.686603 = 14,757.78.
5. 5.Denominator: 1.686603 − 1 = 0.686603.
6. 6.Divide: 14,757.78 ÷ 0.686603 = ₹21,494 per month.

Over 60 months that totals ₹12,89,634, of which ₹2,89,634 is interest— around 29% on top of what you borrowed. The calculator above runs exactly this arithmetic, then walks the balance forward month by month to build the amortization schedule, which is why the schedule's interest column always adds up to the total shown on the KPI card.

How to Calculate Interest on a Loan: Flat vs. Reducing Rate

Anyone working out how to calculate interest on a loan needs to establish one thing before touching a formula: which of two entirely different conventions the quoted rate uses. Search for how to calculate interest on loan and you will find both methods described interchangeably, which is precisely the confusion that costs borrowers money — the two produce very different totals from the same headline percentage.

A flat rate charges interest on the original principal for every year of the term, regardless of how much you have repaid. Interest = P × rate × years, and it is indifferent to your repayments. A reducing balance rate charges interest only on the balance still outstanding, recalculated every month. Two loans quoted at the same number are not remotely the same loan.

The same 10% costs ₹1,12,589 more under the flat convention — about 82% more interest for an identical headline figure. The last row is the one worth memorising: a 10% flat loan is arithmetically equivalent to roughly 17.27% on a reducing balance. Banks quote home, car and personal loans on reducing balance, so the calculator above uses it. Flat rates persist mainly in consumer-durable finance and informal lending, and the gap widens as the term lengthens — which is precisely why longer flat-rate offers should be treated with suspicion.

How Much Loan Can I Get? Salary Multipliers & FOIR Explained

The question how much loan can I get is usually asked as a multiple of salary, but that is not how a lender decides. Underwriting works backwards from the instalment you can service, using the Fixed Obligation to Income Ratio (FOIR) — the share of your net monthly income already committed to debt, plus whatever the new EMI would add.

Most Indian lenders cap FOIR between 40% and 50% of net take-home pay. Higher incomes are often allowed toward the upper end, on the reasoning that living costs do not scale proportionally with salary. Critically, the calculation runs on net income after tax and provident fund, not on CTC, and existing obligations are deducted before anything is offered.

Worked Example: How Much Personal Loan Can I Get on a ₹60,000 Salary?

Assume ₹60,000 net a month with no existing EMIs, and a personal loan at 12% over five years:

• •At a 50% FOIR, the maximum EMI is ₹30,000. Reversing the EMI formula at 12% over 60 months, that supports a loan of approximately ₹13,48,651.
• •At a more conservative 40% FOIR, the maximum EMI is ₹24,000, supporting roughly ₹10,78,921.
• •With an existing ₹12,000 car loan EMI, the 50% headroom drops from ₹30,000 to ₹18,000 — and the eligible amount falls to about ₹8,09,000.

These are ceilings, not offers. FOIR establishes the maximum a lender will consider; your credit score, employer category, job stability and existing relationship then determine the rate you are quoted, and the rate feeds straight back into the eligible amount. To check your own position, enter the EMI you could comfortably afford into the calculator above, adjust the rate and tenure to what you have been offered, and read off the loan amount that produces it.

How to Calculate Interest Rate on a Loan: APR vs Processing Fees

Working out how to calculate interest rate on a loanfrom the headline number alone understates what you pay, because a loan's cost is not only its rate. The Annual Percentage Rate (APR) is the figure that folds the compulsory charges back in and lets two offers be compared honestly.

This is where a general interest calculator or a plain percentage calculatorstops being enough. Multiplying a principal by a percentage answers what one year's interest would be on a fixed balance, but a loan balance is not fixed — it falls with every instalment, and the fees are charged against a sum you never fully receive. Both effects need the amortisation the tool above performs.

What Sits On Top of the Rate

• •Processing fee — commonly 0.5% to 2.5% of the sanctioned amount, usually deducted from the disbursal rather than billed separately.
• •GST at 18% on the processing fee, and on most other loan-related service charges.
• •Documentation, legal and technical valuation charges, which are standard on home loans and loans against property.
• •Insurance premiums, where a policy is bundled into the sanction.

Worked Example: The Gap Between 10.5% and What You Actually Pay

Take ₹10,00,000 at 10.5% over five years with a 2% processing fee. The fee is ₹20,000, GST adds ₹3,600, and ₹9,76,400 reaches your account. Your EMI is unchanged at ₹21,494, because it is computed on the full ₹10,00,000 sanctioned — you are paying interest on ₹23,600 you never received.

Measured against the cash actually disbursed, that instalment stream corresponds to an effective rate of about 11.54% a year, not 10.5%. A full percentage point of the true cost sits outside the advertised rate. This is why a lower headline rate paired with a higher fee can be the more expensive loan, and why the only sound comparison is against the money you receive rather than the money you are sanctioned.

Tenure Is the Other Lever

Rate is not the only determinant of total cost. Holding ₹10,00,000 at 10.5% constant and varying only the term:

Moving from three years to twenty cuts the EMI to under a third, but multiplies the interest more than eightfold — from ₹1,70,088 to ₹13,96,112, comfortably more than the sum borrowed. Borrow over the shortest term whose instalment you can service without strain.

Explore Dedicated Loan & Bank EMI Calculators

This page is the general-purpose tool. Each loan type carries its own realistic limits, tenure ceilings and tax treatment, so the dedicated calculators below open with the right bounds already set rather than making you dial them in.

By Loan Type

• •Home Loan EMI Calculator — Up to ₹10 crore over 30 years, with Section 24(b) and 80C context.
• •Car Loan EMI Calculator — Shorter 7-year ceiling and on-road-price planning.
• •Personal Loan EMI Calculator — Unsecured borrowing, where rate spreads are widest.
• •Education Loan EMI Calculator — Moratorium-aware planning over a 15-year term.
• •Loan Against Property EMI Calculator — Secured borrowing against residential or commercial property.

By Bank

Bank-specific pages cover the scheme names, eligibility conventions and verification routes for each lender: