How to Use an EMI Calculator: Complete Guide with Examples

What is EMI?

EMI (Equated Monthly Instalment) is the fixed amount you pay every month to repay a loan. It includes both principal repayment and interest. EMIs make large purchases affordable by spreading the cost over time.

EMI Formula

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

• P = Principal loan amount
• r = Monthly interest rate (Annual rate ÷ 12 ÷ 100)
• n = Number of months (tenure in years × 12)

Example Calculation

Loan: ₹10 lakh | Rate: 10% per annum | Tenure: 5 years (60 months)

• r = 10% ÷ 12 ÷ 100 = 0.00833
• n = 60
• EMI = [10,00,000 × 0.00833 × (1.00833)^60] / [(1.00833)^60 – 1]
• EMI = ₹21,247/month
• Total amount paid = ₹21,247 × 60 = ₹12,74,820
• Total interest = ₹2,74,820

Impact of Interest Rate on EMI

For ₹10 lakh loan over 5 years:

Impact of Tenure on EMI

For ₹10 lakh at 10%:

Lesson: Shorter tenure = higher EMI but much less total interest paid.

Should You Prepay Your Loan?

Yes, if you have extra cash. Even one lump-sum prepayment reduces principal and interest significantly. Use our prepayment calculator to see the savings.