How EMI is calculated

An equated monthly instalment (EMI) is a fixed monthly loan payment. It combines interest on the outstanding balance and a portion of principal.

Inputs that determine EMI

The loan amount, annual interest rate and tenure determine the monthly rate and number of payments. A lower rate generally reduces both EMI and total interest.

How the formula works

The reducing-balance formula applies interest to the outstanding principal each month. Early payments typically contain more interest; later payments contain more principal.

Reading the schedule

An amortization schedule shows each payment's opening balance, interest, principal and closing balance.

Frequently asked questions

Does a longer tenure reduce EMI?

Usually yes, but it can increase total interest because the loan remains outstanding for longer.

What happens when interest is zero?

The principal is divided evenly across the number of monthly payments.

Calculations are based on the formulas and assumptions shown. Actual financial outcomes may differ.

Use the EMI calculator