Understanding EMI: How Loan EMI Is Calculated

An EMI (Equated Monthly Installment) is the fixed amount you pay every month toward a loan until it's fully repaid. Whether it's a home loan, car loan, or personal loan, the same underlying formula decides how much you owe each month.

The EMI Formula

EMI = P × r × (1 + r)ⁿ / ((1 + r)ⁿ − 1)

• P is the principal (the amount you borrow)
• r is the monthly interest rate (annual rate divided by 12, divided by 100)
• n is the number of monthly installments (loan tenure in months)

A Worked Example

Say you borrow ₹5,00,000 at 9% annual interest for 5 years (60 months):

• Monthly rate r = 9 / 12 / 100 = 0.0075
• n = 60
• EMI works out to roughly ₹10,379 per month

Over 60 months, you'd pay about ₹6,22,740 in total — meaning around ₹1,22,740 goes toward interest alone.

What Actually Changes Your EMI

Three levers control your EMI: how much you borrow, the interest rate, and the tenure. A longer tenure lowers your monthly payment but increases the total interest you pay over the life of the loan — there's no free lunch, just a trade-off between monthly affordability and total cost.

Rather than doing this math by hand every time you're comparing loan offers, plug your numbers into our EMI calculator below to see the monthly payment, total interest, and total payment instantly.