How to Calculate EMI on a Loan
Learn how loan EMI is calculated, what raises or lowers it, how much of it is interest, and how prepayment and tenure change the total you pay.
By the ToolsHub team · Updated August 21, 2026
An EMI (Equated Monthly Instalment) keeps your loan repayment the same every month while the split between interest and principal shifts over time. Knowing how it's calculated helps you compare loans and see the true cost of borrowing.
The EMI formula
EMI = P × r × (1 + r)n ÷ ((1 + r)n − 1), where P is the loan amount, r is the monthly interest rate (the annual rate divided by 12 and by 100), and n is the number of months. Early EMIs are mostly interest; later ones are mostly principal — which is why prepaying early saves the most.
A worked example
A ₹10,00,000 loan at 9% for 10 years (120 months) has a monthly rate of 0.75% and an EMI of about ₹12,668. Over 120 months you repay roughly ₹15,20,000, so about ₹5,20,000 is interest. Try your own numbers in the EMI Calculator, which shows the EMI and the interest breakdown instantly.
Before you borrow
Lenders cap your total EMIs at a share of income, so check how much you can borrow with the Home Loan Eligibility Calculator first. And if you're weighing a loan against dipping into savings, compare what those savings would earn in a fixed deposit over the same period.
Frequently asked questions
- How is EMI calculated?
- EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where P is the loan amount, r is the monthly interest rate (annual ÷ 12 ÷ 100), and n is the tenure in months. The EMI Calculator does this and splits out the total interest.
- Does a longer tenure reduce my EMI?
- Yes — a longer tenure lowers the monthly EMI, but you pay more total interest because the loan is outstanding for longer. It's a trade-off between monthly affordability and total cost.
- How does prepayment help?
- Prepaying cuts the outstanding principal, and since early EMIs are mostly interest, an early prepayment removes a large chunk of future interest.
- Is the interest rate monthly or yearly?
- Loan rates are quoted per year; the EMI formula converts the annual rate to a monthly one internally.