What is an EMI?
EMI stands for Equated Monthly Installment — the fixed amount you pay every month until your loan is fully repaid. Each EMI covers two things: a part of the principal (the money you borrowed) and the interest on what's still owed. Early on, more of your EMI goes to interest; later, more goes to the principal.
How EMI is calculated
The formula is: EMI = P × r × (1+r)ⁿ ÷ ((1+r)ⁿ − 1), where P is the loan amount, r is the monthly interest rate (yearly rate ÷ 12 ÷ 100), and n is the number of months. It looks complex — this tool handles it instantly. For a full step-by-step breakdown with a worked example, see our guide: How Is EMI Calculated?
Tips before you take a loan
- A longer tenure means a smaller EMI but much more total interest.
- Even a small rate difference adds up to a lot over years — compare lenders.
- Check for processing fees and prepayment charges, not just the EMI.