How to Calculate EMI

EMI means equal monthly installment: one payment each month that covers that month’s interest and reduces the remaining principal. Early months are interest-heavy. Later months retire more of the original amount. That is a fully amortizing, reducing-balance loan — not a flat-rate “interest on the original amount for the whole term”.

The formula

Let P be the financed amount, r the monthly rate (annual rate ÷ 12), and n the number of months. EMI = P × r(1+r)^n ÷ ((1+r)^n − 1). If the annual rate is 0%, EMI is simply P ÷ n. The last month is adjusted so the balance reaches zero.

Worked example

A 1,500,000 loan at 12% a year for 3 years has n = 36. Monthly rate r = 0.01. EMI is 49,821.46. Total repayment is 1,793,572.73 and total interest is 293,572.73. Those figures match the EMI Calculator on this site.

Down payment

EMI is calculated on what you actually borrow. If the asset costs 2,000,000 and you pay 500,000 up front, P is 1,500,000. Putting a smaller amount into the “loan amount” field and ignoring the down-payment box is the same math — the extra field is there so the sticker price stays visible.

This is an estimate from amount, rate and term. Insurance, late fees and prepayment rules come from the lender’s contract, not from this page.