EMI Calculator
Equated monthly instalment, total interest and a full year-by-year amortisation of any reducing-balance loan.
Inputs
One-time fee added to cost of credit
Formula
- r = annual rate / 12 / 100
- n = tenure in years × 12
- EMI = P × r × (1 + r)ⁿ / [(1 + r)ⁿ − 1]
- Total payment = EMI × n
- Total interest = Total payment − P
A reducing-balance loan charges interest only on the outstanding principal. The EMI is the constant payment that exactly retires the loan over n months — it is the future-value-of-annuity formula rearranged for the payment. Early instalments are mostly interest because the balance is high; as the balance falls, the principal share of each EMI rises, which is why the amortisation schedule below is steeply skewed.
Step-by-step calculation
Monthly rate
8.75 / 12 / 100
0.007292
Number of instalments
20 × 12
240
Growth factor (1 + r)ⁿ
(1 + 0.007292)^240
5.7182
EMI
P·r·(1+r)ⁿ / ((1+r)ⁿ − 1)
₹22,092.77
Total payment
22,093 × 240
₹5,302,264.25
Total interest
5,302,264 − 2,500,000
₹2,802,264.25
Assumptions
- Interest is compounded monthly on the reducing balance.
- The rate stays fixed for the whole tenure (floating loans reprice with the benchmark).
- The first EMI falls one month after disbursal; no moratorium.
- Insurance, GST on fees and late-payment charges are excluded unless entered.
Tips
- Shortening the tenure cuts total interest far more than shaving the rate by a few basis points.
- One extra EMI a year on a 20-year home loan typically removes 3–4 years of payments.
- Compare lenders on APR (rate plus fees), not the headline rate.
Warnings
- Floating-rate loans keep the EMI fixed and extend the tenure when the benchmark rises — confirm which lever your lender moves.
- Prepayment penalties may apply on fixed-rate and non-individual loans.
Standards & references
- RBI reducing-balance method
- APR disclosure (Key Fact Statement)
- IS 15883 (project cost planning)
Frequently asked questions
Why is the early EMI almost all interest?
Interest each month is balance × monthly rate. In month one the balance is the full principal, so interest dominates. The principal component grows geometrically at (1 + r) each month.
Does a longer tenure reduce cost?
No. It reduces the monthly outflow but increases total interest, often substantially — compare the total-interest figure across tenures before choosing.
How is APR different from the interest rate?
APR folds processing fees and mandatory charges into an effective annual cost, so it is the honest basis for comparing two loan offers.
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