EMI Calculator — Loan EMI, Total Interest & Amortization

EMI formula

The standard equated monthly installment formula is EMI = P × r × (1+r)^n / ((1+r)^n − 1), where:

• P is the loan principal (the amount you borrow).
• r is the monthly interest rate — the annual rate divided by 12, then by 100. A 9.5% annual rate becomes r = 0.095 / 12 ≈ 0.00792.
• n is the total number of monthly installments (tenure in years × 12).

Worked example: borrow ₹10,00,000 at 9.5% per year for 5 years (60 months). Plugging in: EMI ≈ ₹21,019 per month. Total payment over 60 months ≈ ₹12.61 lakh, of which roughly ₹2.61 lakh is interest and ₹10 lakh is principal.

How interest decreases over time

Every EMI is the same number, but its composition shifts month by month. In the first EMI of a fresh loan, the lender charges interest on the full outstanding principal — so most of that EMI is interest and only a thin slice is principal. As the balance falls, the interest portion of each EMI shrinks and a larger share goes to repaying principal.

This is why prepaying early saves the most. A lump-sum prepayment in year 1 directly cuts the principal that future interest is calculated on, for the entire remaining tenure. The same prepayment in year 4 of a 5-year loan barely moves the needle, because most of the interest has already accrued.

Reduce your total interest

• Choose a shorter tenure. The EMI is bigger but the interest you pay can drop by 40-60% versus a long tenure at the same rate.
• Make a higher prepayment whenever you have surplus. Bonuses, tax refunds, or a good quarter at work — channel them into principal reduction.
• Switch to a lower-rate lender. Even a 0.5% drop in interest rate on a long loan can save several months of EMI in total interest. Watch for prepayment penalties on the old loan.
• Set up a partial prepayment annually. Most lenders allow one or two free part-prepayments per year on floating-rate loans. Automating an extra EMI each anniversary compounds the savings.

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