How this calculation works
An EMI is the regular loan repayment that combines principal and interest. For a reducing-balance loan, interest is calculated on the amount still owed, so the interest share usually falls as repayments progress. Use the annual rate from the lender and choose months or years for the tenure. Compare the monthly commitment with the total interest: a longer term can lower the EMI while increasing the overall cost.
Worked example
This example uses illustrative inputs. Your current result is shown above.
For ₹25,00,000 at 8.5% annual reducing-balance interest over 20 years (240 monthly payments), the monthly rate is 8.5% ÷ 12. EMI = P × r ÷ [1 − (1 + r)⁻²⁴⁰] gives ₹21,695.58 per month. Total repayment is approximately ₹52,06,939.40, including ₹27,06,939.40 of interest, before fees. Totals use the unrounded EMI.
Assumptions and limits
- The annual rate stays constant, repayments are monthly and payments are made on time.
- Choose reducing balance when interest follows the outstanding principal; flat interest uses the original principal throughout the term.
- The base EMI excludes processing fees, insurance and taxes unless a separate field includes them. Lender rounding and payment dates can change the final instalment.
Questions people ask
Is the interest rate monthly or annual?
Enter the annual percentage rate quoted for the selected interest method. For monthly reducing-balance repayments, the calculation divides that nominal annual rate by 12. Do not enter a monthly rate in the annual-rate field.
Can I enter a loan term in months?
Yes. Switch the tenure unit between years and months. Twenty years and 240 months represent the same repayment period; changing the unit should not change the underlying loan duration.
Why is a flat-rate loan more expensive at the same quoted rate?
Flat interest keeps using the original borrowed amount even after principal has been repaid. Reducing-balance interest uses the smaller outstanding balance. Compare both methods using the same amount and duration before comparing lender quotes.
How will an extra repayment affect my EMI?
A lender may lower the EMI for the remaining term or keep the EMI and shorten the loan. Open Loan Prepayment to compare both using the month of the payment and its amount.