EMI (Equated Monthly Installment) is a fixed payment amount made by a borrower to a lender at a specified date each month. It includes both principal repayment and interest, ensuring the loan is fully repaid by the end of the tenure.

What is the EMI formula?

EMI = [P × r × (1+r)^n] / [(1+r)^n - 1], where P is the principal loan amount, r is the monthly interest rate (annual rate/12/100), and n is the total number of monthly installments.

Does prepayment reduce EMI or tenure?

Prepayment can reduce either EMI or tenure, depending on your choice. Reducing tenure saves more interest but maintains higher monthly payments. Reducing EMI lowers monthly burden but extends interest payment.

What factors affect EMI amount?

EMI depends on three factors: loan amount (higher principal = higher EMI), interest rate (higher rate = higher EMI), and loan tenure (longer tenure = lower EMI but more total interest paid).

Is home loan EMI tax deductible?

In India, home loan principal (up to ₹1.5 lakh under Section 80C) and interest (up to ₹2 lakh under Section 24 for self-occupied property) are tax deductible. Car and personal loan EMIs are generally not tax deductible.

EMI Calculator 2026 | Home Loan, Car Loan, Personal Loan EMI

What is EMI?

EMI (Equated Monthly Installment) is a fixed monthly payment made by a borrower to a lender. Each EMI payment includes both principal repayment and interest, structured so that the loan is completely repaid by the end of the tenure.

EMIs make large purchases affordable by spreading the cost over months or years. They're used for home loans, car loans, personal loans, education loans, and consumer durables.

EMI Formula

EMI = [P × r × (1+r)^n] / [(1+r)^n - 1]

Where:
P = Principal loan amount
r = Monthly interest rate = Annual rate / 12 / 100
n = Total number of monthly installments (tenure in months)

Example: ₹30 lakh at 8.5% for 20 years
r = 8.5 / 12 / 100 = 0.00708
n = 20 × 12 = 240 months
EMI = [30,00,000 × 0.00708 × (1.00708)^240] / [(1.00708)^240 - 1]
EMI ≈ ₹26,035 per month

How EMI Works

In the early years of a loan, a larger portion of your EMI goes toward interest. As you continue paying, the interest component decreases and the principal component increases:

Initial months: ~70-80% of EMI is interest, ~20-30% is principal repayment.
Middle period: Interest and principal portions become roughly equal.
Final months: Most of the EMI goes toward principal, minimal interest.

This is why prepayments are most effective early in the loan tenure—they directly reduce principal and save significant interest.

Factors Affecting EMI

Loan Amount (P): Higher principal means higher EMI. Directly proportional relationship.
Interest Rate (r): Higher rate increases EMI. Even 0.5% difference significantly impacts total cost.
Loan Tenure (n): Longer tenure reduces EMI but increases total interest paid.

EMI for Different Loan Types

Typical Interest Rates (2024-25):

Home Loan: 8.25% - 9.5% p.a.
Car Loan: 8.5% - 12% p.a.
Personal Loan: 10.5% - 18% p.a.
Education Loan: 8% - 15% p.a.
Gold Loan: 7% - 12% p.a.

EMI vs Tenure Trade-off

For a ₹30 lakh loan at 8.5% interest:

10-year tenure: EMI ₹37,194 | Total Interest ₹14,63,303
15-year tenure: EMI ₹29,543 | Total Interest ₹23,17,794
20-year tenure: EMI ₹26,035 | Total Interest ₹32,48,348
25-year tenure: EMI ₹24,131 | Total Interest ₹42,39,233

Shorter tenure = higher EMI but significant interest savings.

Benefits of This Calculator

Instant calculation: See EMI change in real-time as you adjust values.
Visual breakdown: Doughnut chart shows principal vs interest clearly.
Compare scenarios: Easily try different amounts, rates, and tenures.
Plan affordability: Determine if EMI fits your monthly budget.
Free to use: No registration or hidden charges.

Frequently Asked Questions

What happens if I miss an EMI payment?

Missing EMI results in late payment fees (1-2% of EMI), negative impact on credit score, and the unpaid amount accrues interest. Multiple missed payments can lead to loan default and legal action.

Can I pay more than my EMI?

Yes, most loans allow prepayment or part-payment. This reduces your principal, saving interest. Some loans have prepayment penalties (typically for fixed-rate loans), so check your loan agreement.

Is it better to increase EMI or reduce tenure?

Both save interest. Reducing tenure is mathematically identical to increasing EMI. Choose based on cash flow—if you can afford higher EMI consistently, increase it. Otherwise, make lump-sum prepayments when possible.

Why is my actual EMI slightly different from calculated?

Banks may round EMI amounts, include processing fees, or use slightly different calculation methods. Insurance premiums, if bundled with the loan, also increase the effective EMI.

How much EMI can I afford?

Financial advisors recommend total EMIs should not exceed 40-50% of your monthly income. Banks typically approve loans where EMI is 40-60% of net income, depending on other obligations.

Does EMI change during the loan period?

For fixed-rate loans, EMI remains constant. For floating-rate loans (most home loans in India), EMI can change when the bank revises interest rates based on RBI policy changes.