Loan EMI Calculator
Your exact monthly instalment, the total interest you will pay over the life of the loan, and a year-by-year schedule showing how the balance falls.
The EMI formula, explained
Banks worldwide compute equated monthly instalments with the reducing-balance formula. Every EMI first pays the interest accrued that month on the outstanding balance; whatever remains reduces the principal. Early in the loan most of your EMI is interest, and the mix flips as the balance shrinks.
P = principal, r = monthly rate (annual ÷ 12 ÷ 100), n = months
For example, a ₹25,00,000 home loan at 8.5% for 20 years gives an EMI of about ₹21,696, and total interest of roughly ₹27.1 lakh, more than the loan itself. The amortization table above shows that reality year by year, which is why prepayment in early years saves so much.
How to cut your total interest
Three levers matter. First, tenure: the same loan over 15 years instead of 20 raises the EMI to about ₹24,617 but cuts total interest by around ₹8.8 lakh. Second, prepayment: one extra EMI per year in the early phase can shorten a 20-year loan by roughly 3 years. Third, rate negotiation: a 0.25% reduction on a ₹25 lakh, 20-year loan saves about ₹94,000. Run the numbers above with your own figures before talking to your bank.
Fixed vs floating, and what this calculator assumes
The calculator assumes the rate stays constant, which matches fixed-rate loans exactly and floating-rate loans as of today. When your floating rate resets, re-run the numbers with the new rate and the current outstanding balance to see your new EMI or revised tenure.
Reading the amortization table
Look at year 1 of the default example: of roughly ₹2.6 lakh paid, about ₹2.1 lakh is interest and only ₹50,000 is principal. By year 15 the proportions have reversed. Two practical consequences follow. First, prepayments made in the first third of the tenure are worth several times the same prepayment made near the end. Second, if you sell a house or close a loan after only 3 or 4 years, you have mostly paid interest and barely touched the principal, which changes the economics of "renting vs buying for a short stay".
Flat rate vs reducing balance: a warning
Some vehicle and personal loan sellers quote a "flat rate" that is applied to the original principal for the whole tenure. A 9% flat rate on a 5-year loan is roughly equivalent to a 16% reducing-balance rate, nearly double. This calculator uses the reducing-balance method that banks and RBI-regulated lenders use for EMI loans; if a dealer’s quoted EMI is higher than the figure here for the same rate, they are quoting flat rate, and you should ask for the effective reducing-balance rate in writing.
Frequently asked questions
How is EMI calculated?
With the reducing-balance formula EMI = P×r×(1+r)ⁿ/((1+r)ⁿ−1), where r is the monthly interest rate and n the number of months. This is the exact formula banks use, so the result here matches your sanction letter.
Does paying one extra EMI a year really help?
Yes, substantially. Extra payments go entirely to principal, and every rupee of principal removed early stops compounding interest for the rest of the tenure. On a typical 20-year home loan, one extra EMI a year shortens the loan by around 3 years.
Should I choose a longer tenure for a lower EMI?
A longer tenure lowers the monthly outgo but raises total interest sharply. Compare both in the calculator: the summary shows interest as a percentage of principal, which makes the cost of stretching the tenure obvious.
Does this work for car and personal loans too?
Yes. The reducing-balance formula is the same for home, car, personal, education and business loans. Just enter the amount, rate and tenure from your offer.