EMI (equated monthly instalment) is the fixed amount you pay every month on a loan. It works the same way for car loans, personal loans and home loans; in the US and UK it is simply called the monthly payment. Use the calculator below with your own numbers, or read on to see exactly how the EMI is worked out.
The EMI formula
EMI = P × r × (1 + r)n ÷ ((1 + r)n − 1)
- P is the loan amount.
- r is the monthly interest rate: the yearly rate ÷ 12 ÷ 100.
- n is the number of monthly payments.
Worked example: ₹5 lakh at 9% for 5 years
Here P = 5,00,000, r = 9 ÷ 12 ÷ 100 = 0.0075 and n = 60. Putting these into the formula gives an EMI of ₹10,379. Over five years you pay ₹6,22,751 in total, of which ₹1,22,751 is interest.
Why early EMIs are mostly interest
Each month, interest is charged on the amount you still owe. In the first month of the example above, ₹3,750 of your EMI is interest and only ₹6,629 reduces the loan. As the balance falls, more of each EMI goes towards the loan itself:
| End of year | Amount still owed |
|---|---|
| 1 | ₹4,17,085 |
| 2 | ₹3,26,392 |
| 3 | ₹2,27,191 |
| 4 | ₹1,18,685 |
| 5 | ₹0 |
This is why paying extra early in a loan saves the most interest. See how much overpaying a car loan saves.
EMI tables
| Loan | Interest rate | EMI over 3 years | EMI over 5 years |
|---|---|---|---|
| ₹5 lakh | 8% | ₹15,668 | ₹10,138 |
| ₹5 lakh | 9% | ₹15,900 | ₹10,379 |
| ₹5 lakh | 10% | ₹16,134 | ₹10,624 |
| ₹5 lakh | 12% | ₹16,607 | ₹11,122 |
| ₹10 lakh | 8% | ₹31,336 | ₹20,276 |
| ₹10 lakh | 9% | ₹31,800 | ₹20,758 |
| ₹10 lakh | 10% | ₹32,267 | ₹21,247 |
| ₹10 lakh | 12% | ₹33,214 | ₹22,244 |
| Loan | Interest rate | Monthly payment over 3 years | Monthly payment over 5 years |
|---|---|---|---|
| $20,000 | 8% | $627 | $406 |
| $20,000 | 9% | $636 | $415 |
| $20,000 | 10% | $645 | $425 |
| $20,000 | 12% | $664 | $445 |
| £15,000 | 8% | £470 | £304 |
| £15,000 | 9% | £477 | £311 |
| £15,000 | 10% | £484 | £319 |
| £15,000 | 12% | £498 | £334 |
How to lower your EMI
- Choose a longer loan, but know it costs more: ₹5 lakh at 9% costs ₹72,395 in interest over 3 years but ₹1,22,751 over 5 years.
- Make a bigger down payment so you borrow less.
- Get a better rate by comparing lenders and keeping a good credit score.
- Prepay when you can to cut the interest and the number of EMIs.
Frequently asked questions
Is the EMI the same every month?
On a fixed-rate loan, yes. On a floating-rate loan, the lender may change your EMI or the number of EMIs when interest rates change.
Does a longer loan cost more?
Yes. The EMI is lower, but you pay interest for more months, so the total cost is higher.
How do I calculate EMI in Excel or Google Sheets?
Use the PMT function: =PMT(yearly rate/12, months, -loan amount). For example, =PMT(9%/12, 60, -500000) gives 10,379.
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