How EMI Is Calculated
An EMI (Equated Monthly Installment) is the fixed amount you repay each month on a loan. Each payment covers part interest and part principal, in a ratio that shifts over time.
The EMI formula
EMI = P × r × (1 + r)n ÷ ((1 + r)n − 1), where P is the principal, r is the monthly interest rate (annual rate ÷ 12 ÷ 100), and n is the number of months.
A worked example
For a ₹10,00,000 loan at 9% annual interest over 20 years (240 months), the monthly rate is 0.0075. Plugging into the formula gives an EMI of roughly ₹8,997 per month.
How tenure changes the picture
A longer tenure lowers the monthly EMI but raises the total interest paid, because you owe the balance for longer. A shorter tenure costs more each month but less overall.
- Higher interest rate → higher EMI.
- Longer tenure → lower EMI, more total interest.
- Larger down payment → smaller principal, smaller EMI.
Use the EMI calculator to test combinations before you commit to a loan.