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EMI calculator: how it works
EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where P is the loan amount, r the monthly interest rate (yearly rate ÷ 12 ÷ 100) and n the number of months. A ₹10,00,000 loan at 10% for 5 years has an EMI of ₹21,247.04.
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EMI formula, worked through
For ₹10,00,000 at 10% a year over 5 years: r = 10 ÷ 12 ÷ 100 = 0.008333, n = 60. (1 + r)^60 = 1.6453. EMI = 10,00,000 × 0.008333 × 1.6453 ÷ 0.6453 = ₹21,247.04.
| Loan | Rate | Tenure | EMI | Total interest |
|---|---|---|---|---|
| ₹5,00,000 | 12% | 3 years | ₹16,607.15 | ₹97,858 |
| ₹10,00,000 | 10% | 5 years | ₹21,247.04 | ₹2,74,823 |
| ₹25,00,000 | 9.5% | 7 years | ₹40,859.95 | ₹9,32,236 |
| $50,000 | 8% | 5 years | $1,013.82 | $10,829 |
How to use the EMI calculator
- Pick the currency and enter the loan amount.
- Enter the yearly interest rate.
- Enter the tenure in years or months.
- Read the EMI and open the year-by-year schedule.
Business loans and cash flow
An EMI is a fixed monthly outflow, so plan it against when your customers actually pay. Late-paying clients are the most common reason small businesses miss EMIs. Invoicing promptly, with clear due dates and payment links, shortens the gap between doing the work and having the cash.
Questions people ask
How is EMI calculated?
EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where P is the loan amount, r the monthly interest rate (yearly rate ÷ 12 ÷ 100) and n the number of months. A ₹10,00,000 loan at 10% for 5 years has an EMI of ₹21,247.04.
How much interest will I pay in total?
Total interest = EMI × number of months − loan amount. For ₹10,00,000 at 10% over 60 months that is ₹21,247.04 × 60 − ₹10,00,000, about ₹2,74,823.
Does a longer tenure save money?
It lowers the EMI but raises the total interest. The same ₹10,00,000 at 10% costs about ₹1,07,000 in interest over 2 years and about ₹5,86,000 over 10 years.
Why does most of the early EMI go to interest?
Interest is charged on the outstanding balance, which is highest at the start. As you repay principal, the interest part of each EMI falls and the principal part grows.
Does this include processing fees or insurance?
No. It shows the EMI on a reducing-balance loan. Lenders may add processing fees, GST on fees, insurance or prepayment charges; ask for the annual percentage rate to compare offers.