Loans & EMI
How EMI is calculated
A reducing-balance EMI combines interest on the outstanding loan balance with a principal repayment each month.
The formula
EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where P is principal, r is the monthly interest rate and n is the number of monthly instalments.
Why the early split looks different
Interest is calculated on the remaining principal. At the start, that balance is larger, so more of an EMI usually goes to interest. As the balance falls, more goes to principal.
What changes the total cost
A longer tenure normally reduces EMI but increases the months over which interest is charged. Rate changes, fees and prepayments can make a lender's schedule differ from a simple estimate.
This guide is for general education. Rules, lender terms, bank terms and individual circumstances can change the result.
Use the relevant calculator