How EMI is calculated
EMI (Equated Monthly Instalment) uses the standard reducing-balance formula that every Indian bank and NBFC follows:
EMI = P × r × (1+r)ⁿ / ((1+r)ⁿ − 1)
where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12 ÷ 100) and n is the number of monthly instalments. Early EMIs are mostly interest; later ones are mostly principal.
Tips to reduce your EMI burden
- A longer tenure lowers the EMI but sharply increases total interest — try both sliders above and compare.
- Even one extra EMI paid per year as prepayment can cut years off a home loan.
- Rates differ between lenders by 0.25–1%. On a ₹25 lakh, 20-year loan, 0.5% lower rate saves roughly ₹1.5–2 lakh.
FAQs
Does this calculator work for home, car and personal loans?
Yes. The reducing-balance EMI formula is identical for all standard loans — only the amount, rate and tenure differ.
Is GST charged on loan EMIs?
No GST applies to the principal or interest of a loan EMI. GST (18%) applies only to processing fees and service charges.
What is a reducing-balance rate vs a flat rate?
Banks quote reducing-balance rates: interest is charged only on outstanding principal. A "flat rate" (common with some financiers) charges interest on the full original amount throughout — a 10% flat rate can equal roughly 18% reducing. This calculator uses reducing balance.
Is my data stored?
No. The calculation runs entirely in your browser; nothing is sent to any server.