EMI Calculator
Calculate your Equated Monthly Installment (EMI) for any loan. EMI is the fixed monthly payment that includes both principal and interest portions of a loan paid by a borrower to a lender.
EMI Summary
Monthly EMI:
$0.00
Total Amount Payable:
$0.00
Total Interest:
$0.00
Interest as % of Principal:
0.00%
First Month Breakdown
Principal Portion:
$0.00
Interest Portion:
$0.00
Balance After Payment:
$0.00
Loan Details
Principal Amount:
$0.00
Annual Interest Rate:
0.00%
Loan Term:
0 months
Amortization Schedule
Enter loan details and click calculate to view amortization schedule
Understanding EMI Calculations
EMI stands for Equated Monthly Installment. It is a fixed payment amount made by a borrower to a lender at a specified date each calendar month. EMIs are used to pay off both interest and principal each month so that over a specified number of years, the loan is paid off in full.
How EMI is Calculated
EMI Formula
EMI = [P × r × (1+r)^n] / [(1+r)^n - 1]
- P = Principal loan amount
- r = Monthly interest rate (annual rate ÷ 12)
- n = Number of monthly installments
EMI Components
- Principal: Portion that reduces loan balance
- Interest: Cost of borrowing money
- Fixed Amount: Same payment every month
- Tax Benefits: Interest portion may be deductible
EMI Calculation Examples
Sample EMI Calculations
$100,000 Loan - 8.5% Rate, 5 Years
- Monthly EMI: $2,027
- Total Interest: $21,640
- Total Amount: $121,640
- Interest Portion: 21.6%
$50,000 Loan - 12% Rate, 3 Years
- Monthly EMI: $1,717
- Total Interest: $16,812
- Total Amount: $66,812
- Interest Portion: 33.6%
Factors Affecting EMI Amount
Principal Amount
- Higher principal = Higher EMI
- Direct proportional relationship
- Most significant factor
- Down payments reduce principal
Interest Rate
- Higher rate = Higher EMI
- Even 0.5% difference matters
- Compare rates from lenders
- Fixed vs variable rates
Loan Term
- Longer term = Lower EMI
- But higher total interest
- Balance affordability vs cost
- Consider opportunity cost
Processing Fees
- Added to principal amount
- Increases EMI slightly
- Negotiate with lender
- Compare total cost
EMI vs Flat Rate Interest
Reducing Balance (EMI)
- Interest calculated on outstanding balance
- EMI remains constant
- Principal portion increases over time
- More accurate reflection of interest cost
Flat Rate Interest
- Interest calculated on original principal
- Total interest fixed at loan start
- Simple to understand
- Less common for home/car loans
Prepayment and Foreclosure
Benefits of Prepayment
Advantages:
- Reduce total interest paid
- Shorten loan tenure
- Save on future interest
- Build equity faster
Considerations:
- Prepayment charges may apply
- Check loan agreement
- Tax implications
- Opportunity cost of funds
Strategies:
- Make extra payments
- Use annual bonuses
- Tax refunds
- Year-end payments
Tax Benefits:
- Interest portion deductible
- Check local tax laws
- Documentation required
- Maximum deduction limits
Key Takeaways for EMI Calculations
- EMI is a fixed monthly payment that includes both principal and interest portions
- The EMI formula uses reducing balance method for accurate interest calculations
- Higher principal amounts, interest rates, and processing fees increase EMI
- Longer loan terms reduce monthly EMI but increase total interest paid
- Prepayments can significantly reduce total interest and shorten loan tenure
- Compare EMIs across lenders and consider all associated costs
- Use amortization schedule to understand payment breakdown over time
- Factor in tax benefits when calculating the true cost of borrowing