Equated Monthly Instalment (EMI) is the fixed amount you pay every month to repay a loan. Understanding EMI helps you choose a loan amount and tenure that fits your budget.

EMI Formula

EMI = P × r × (1+r)^n / ((1+r)^n - 1)

Where:

  • P = Principal loan amount
  • r = Monthly interest rate (annual rate / 12 / 100)
  • n = Total number of monthly instalments

Example Calculation

For a loan of Rs. 20,00,000 at 9% annual interest for 20 years:

  • Monthly interest rate = 9 / 12 / 100 = 0.0075
  • Number of instalments = 20 x 12 = 240
  • EMI is approximately Rs. 17,995

What Affects Your EMI

  • Loan amount: Higher principal means higher EMI
  • Interest rate: Even a 0.5% increase can significantly raise total interest
  • Tenure: Longer tenure lowers EMI but increases total interest paid

Smart Borrowing Tips

  • Keep EMI under 35-40% of your monthly take-home income
  • Compare offers from multiple lenders before finalizing
  • Use part-prepayments whenever possible to reduce interest burden

Try Our EMI Calculator

Use the EMI Calculator to estimate your monthly payment instantly.