What is EMI (Equated Monthly Installment)?
An EMI (Equated Monthly Installment) Calculator is a financial tool that helps you calculate the fixed monthly payment (EMI) you need to make towards a loan — such as a car loan, home loan, or personal loan — over a specified period.
EMIs are commonly used for:
- Home loans
- Car loans
- Personal loans
- Educational loans
- Consumer Durable Loans (e.g., electronics, furniture)
How is EMI calculated?
EMI is calculated using the following formula:
EMI = [P × R × (1+R)^N] / [(1+R)^N – 1]
Where:
P = Loan Amount (Principal).
R = Monthly Interest Rate (Annual Rate ÷ 12 ÷ 100).
N = Loan Tenure in Months (Number of EMIs).
Example: If you borrow ₹10,00,000 at 10% annual interest for 5 years (60 months),
your monthly interest rate will be: 10 ÷ 12 ÷ 100 = 0.00833
Your EMI will be ₹21,247 (approximately)
What are the components of EMI?
Each EMI includes two parts:
- Principal Repayment – Reduces the outstanding loan
- Interest Payment – Cost paid to the lender
In the early stages of the loan, the interest portion is higher. Over time, the principal component increases.
Amortization Schedule:
This shows the breakup of each EMI into principal and interest and the outstanding loan balance after every payment.
Types of EMI Calculators
Basic EMI Calculator:
- Inputs: Loan Amount, Interest Rate, Tenure
- Outputs: EMI, Total Payment, Total Interest
Advanced EMI Calculator:
Supports prepayments, step-up/step-down EMIs, part-payments
Loan-specific EMI Calculators:
- Home Loan EMI Calculator
- Personal Loan EMI Calculator
- Car Loan EMI Calculator
What documents are required for loan application?
- Identity Proof (Aadhaar, PAN, Passport)
- Address Proof
- Income Proof (Salary Slips, ITR)
- Bank Statements
- Completed loan application form
What factors affect your EMI?
- Loan Amount – Higher amount = higher EMI
- Interest Rate – Higher rate = higher EMI
- Loan Tenure – Longer tenure = lower EMI, but more total interest
- Prepayments – Reduce your loan burden faster
- Type of Interest Rate –
- Fixed: EMI remains constant
- Floating: EMI can vary with market conditions
How to reduce your EMI?
- Choose a longer tenure (lower EMI but more interest)
- Negotiate a lower interest rate
- Prepay when possible
- Compare offers from multiple banks
- Consider floating rate loans when rates are declining
What if you miss an EMI?
Missing an EMI can lead to:
- Late payment penalties
- Negative credit score impact
- Possible legal action for prolonged defaults